Fixed price bidding vs the Cone of Uncertainty
Software estimation’s “Code of Uncertainty” suggests that before the requirements & user interface design is completed on a software project, time to complete the project can vary by up to 16x.
(Source: http://www.construx.com/Page.aspx?hid=1648)
So, before you have pinned down the exact requirements, the actual time to compete the project could take up to 16 times longer than your first estimate. Only after you have pinned down the user interface should you expect your estimates to be within 25% of the actual time to complete the project (an error % that can be managed). Note that this data assumes an experienced team, good estimators and NO additional requirements introduced late in the project (and good luck to you finding a project like that!)
Given this research what are the chances of a fixed price bid coming in on time or on budget? Virtually zero.
And what is the first thing to slip under schedule pressure - quality.
So, our theory implies - if you go with a fixed price bid for any significant piece of work, before the user interface has been designed, then:
- The work delivered will be late (somewhere between 4 & 16 times the original estimate)
- Work delivered closer to the delivery date will be of low quality.
Is this true?
What have your experiences been?
Comments
Recommended reads
-
