# Cost, Value & Investment: How Much Will This Project Cost? Part 2

This post is continued from Cost, Value & Investment: How Much Will This Project Cost, Part 1

We've established that you need to know how much this project will cost. I'm assuming you have more than a small project.

If you have to estimate a project, please read the series starting at Estimating the Unknown: Dates or Budget, Part 1. Or, you could get Essays on Estimation. I'm in the midst of fixing it so it reads like a real book. I have more tips on estimation there.

For a program, each team does this for its own ranked backlog:

• Take every item on the backlog and roadmap, and use whatever relative sizing approach you use now to estimate. You want to use relative sizing, because you need to estimate everything on the backlog.
• Tip: If each item on the backlog/roadmap is about team-day or smaller, this is easy. The farther out you go, the more uncertainty you have and the more difficult the estimation is. That's why this is a tip.
• Walk through the entire backlog, estimating as you proceed. Don’t worry about how large the features are. Keep a count of the large features. Decide as a team if this feature is larger than two or three team-days. If it is, keep a count of those features. The larger the features, the more uncertainty you have in your estimate.
• Add up your estimate of relative points. Add up the number of large features. Now, you have a relative estimate, which based on your previous velocity means something to you. You also have a number of large features, which will decrease the confidence in that estimate.
• Do you have 50 features, of which only five are large? Maybe you have 75% confidence in your estimate. On the other hand, maybe all your features are large. I might only have 5-10% confidence in the estimate. Why? Because the team hasn’t completed any work yet and you have no idea how long your work will take.

As a software program team, get together, and assess the total estimate. Why the program team? Because the program team is the cross-functional team whose job is to get the software product to done. It's not just the software teams—it's everyone involved in the technical program team.

Note: the teams have to trust Sally, Joe, Henry and Tom to represent them to the software program team. If the teams do not, no one has confidence in any estimate at all. The estimate is a total SWAG.

The delegates to the program team know what their estimates mean individually. Now, they “add” them together, whatever that means. Do you realize why we will call this prediction? Do Sally, Joe, Henry, and Tom have feature teams, service teams, or component teams? Do they have to add time for the experiments as they transition to agile? Do they need to gain the trust of their management? Or, are they already experienced agile feature teams?

The more experienced the teams are at agile, the better the estimate is. The more the teams are feature teams, the better the estimate is. If you are new to agile, or have feature teams, or have a mixed program (agile and non-agile teams), you know that estimate is way off.

Is it time for the software program manager to say, “We have an initial order-of-magnitude prediction. But we haven’t tested this estimate with any work, so we don’t know how accurate our estimates are. Right now our confidence is about 5-10% (or whatever it is) in our estimate. We've spent a day or so estimating, because we can spend time delivering, rather than estimating. We need to do a week or two of work, deliver a working skeletong, and then we can tell you more about our prediction. We can better our prediction as we proceed. Remember, back in the waterfall days, we spent a month estimating and we were wrong. This way, you’ll get to see product as we work.”

You want to use the word “prediction” as much as possible, because people understand the word prediction. They hear weather predictions all the time. They know about weather predictions. But when they hear estimates of work, they think you are correct, even if you use confidence numbers, they think you are accurate. Use the word prediction.

## Beware of These Program Estimation Traps

There are plenty of potential traps when you estimate programs. Here are some common problems:

• The backlog is full of themes. You haven't even gotten to epics, never mind stories. I don't see how you can make a prediction. That's like me saying, “I can go from Boston to China on an airplane. Yes, I can. It will take time.” I need more data: which time of year? Mid-week, weekend? Otherwise, I can only provide a ballpark, not a real estimate.
• Worse, the backlog is full of tasks, so you don't know the value of a story. “Fix the radio button” does not tell me the value of a story. Maybe we can eliminate the button instead of fix it.
• The people estimating are not the ones who will do the work, so the estimate is full of estimation bias. Just because work looks easy or looks hard does not mean it is.
• The estimate becomes a target. This never works, but managers do it all the time. “Sure, my team can do that work by the end of Q1.”
• Managers think they can predict team size from the estimate. This is the problem of splitting work in the mistaken belief that more people make it easier to do more work. More people make the communications burden heavier.

Estimating a program is more difficult, because bigness makes everything harder. A better way to manage the issues of a program is to decide if it's worth funding in the project portfolio. Then, work in an agile way. Be ready to change the order of work in the backlog, for teams and among teams.

• How much do you want to invest before we stop? Are you ready to watch the program grow as we build it?
• What is the value of this project or program?

You want to ask the teams and product owners these questions:

• Please produce walking skeletons (of features in the product) and build on it
• Please produce small features, so we can see the product evolve every day

The more the sponsors see the product take shape, the less interested they will be in an overall estimate. They may ask for more specific estimates (when can you do this specific feature), which is much easier to answer.

Delivering working software builds trust. Trust obviates many needs for estimates. If your managers or customers have never had trust with a project or program team before, they will start asking for estimates. Your job is to deliver working software every day, so they stop asking.

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