Cost estimation in agile development projects

One of the key measures of the resilience of a project is its ability to reach completion on time and on budget, regardless of the turbulent and uncertain environment it may operate within. Cost estimation and tracking are therefore paramount when developing a system. Cost estimation has long been a difficult task in systems development, and although much research has focused on traditional methods, little is known about estimation in the agile method arena. This is ironic given that the reduction of cost and development time is the driving force behind the emergence of the agile method paradigm. This study investigates the applicability of current estimation techniques to more agile development approaches by focusing on four case studies of agile method use across different organisations. The study revealed that estimation inaccuracy was a less frequent occurrence for these companies. The frequency with which estimates are required on agile projects, typically at the beginning of each iteration, meant that the companies found estimation easier than when traditional approaches were used. The main estimation techniques used were expert knowledge and analogy to past projects. A number of recommendations can be drawn from the research: estimation models are not a necessary component of the process; fixed price budgets can prove beneficial for both developers and customers; and experience and past project data should be documented and used to aid the estimation of subsequent projects