Tuesday, 14 April 2009 08:29

Estimation Software Helps Heuristic Negotiate Larger Budget for Software Project

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When can an increase in project costs be a good thing? When it saves a company's business and meets project delivery dates at the same time. That was the experience of Heuristic Solutions, a software development company that specializes in custom applications, in working out a project estimate for a new business opportunity.

Based on intuitive expert judgment, Heuristic thought the budget for the project would be around $600,000. But, intuition can be the bane of business decision-making, and Heuristic decided that a more scientific approach was in order. This represented a very large opportunity, so they wanted to be sure their judgment was correct.

Up until then, their methodology for generating budget estimates relied on complicated spreadsheets that each member of the team would complete. For the new opportunity, they used project estimation software, SLIM-Estimate, from QSM. The outcome was eyebrow-raising, to say the lease.

After sizing the project, Vaughan Moore, a Heuristic business analyst, was surprised to see that the projected cost would actually be more than $1 million, as opposed to the $600,000 they had initially budgeted. He wondered how his client would react to his findings.

Moore decided to use SLIM-Estimate from QSM, Inc., during his final presentation to show the client how the budget was developed. By pulling up the industry productivity trend lines from the QSM database, as well as their own historical data, he showed them the Heuristic team was actually more productive than the industry average. This evidence gave the client confidence the budget was in-line with industry standards and allowed them to present to their board a budget with their own "management reserve".

Process
Without SLIM
(using in-house estimation process)
With SLIM-Estimate
With SLIM Gain in Budget

Initial Budget
$600,000

$1,000,000
$400,000

 

As a result, the client awarded them the first phase of the project. Without the formal estimation process, Heuristic would have under-bid the project and missed deadlines trying to complete a project with unrealistic constraints. A miss of this magnitude could put some companies out of business. With the larger budget, they were able to hire more people which will allow them to stay on schedule.

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