You have an idea for a web application, you can imagine how it is supposed to look and work and you "only" need to find a trustworthy partner to turn your vision into a functional tool. So, you verify the competences and experience of various software houses and once you have chosen your favourites, you ask them to provide a price estimate for your project. And here the things get tough.
It turns out that preparation of a price estimate involves you to a great extent, takes time and sometimes even costs money. Moreover, it is a very complex process that depends on multiple factors. There is also no single standard way of estimating the price of project implementation – the offers of software houses often differ significantly from one another. How to prepare for a price estimate and what to expect from a partner? First of all, you need to know what the IT project price estimate should include and what your partner has to do in order to develop an application for you.
Start with preparing a good answer to the question what the objective of the project is and what business value its implementation will provide you with. How do you want to achieve this? How do you imagine the functioning of your tool? What are the main assumptions of the project? The answers to these questions should be clear and understandable to both you and your IT partner.
It is worth presenting to a subcontractor the project documentation that describes in detail what is supposed to be done. Thanks to that, your partner will prepare a rational – based on defined needs, requirements and resources – price estimation for your project. If you do not have the documentation, you either have it prepared by your IT department or external business analyst or you discuss all the project elements with your partner step by step. Among professionals, this process is called "User Story Mapping" and is used to collect all the requirements.
In practice, it looks as follows: a partner's representative meets with the client and records all the project-related needs. Afterwards, they provide it to an internal team to be responsible for project implementation: starting with IT business analyst, through a graphic artist and UX specialist and ending with a programmer, tester and project manager. In other words, all people participating in the project are involved in preparation of the price estimate. It is one of the factors that conditions its accuracy.
During User Story Mapping a lot of questions regarding the project are bound to appear. They will be aimed at the client, whose task is to provide as complete a feedback as possible. Thanks to that the team is able to keep learning better the substance of the project and defines the tasks that have to be carried out. Knowing what exactly has to be done, it is easier to put a price on it.
The rule is simple – the more unique and complex a project is, the higher the cost of its implementation is going to be (depending, among others, on the number of people involved + their competences). Make sure that the answers provided to the partner are as exhaustive as possible – the time of price estimate preparation depends on whether it is necessary to perform a series of more detailed questions.
It is important to report all expectations regarding the tool's functioning already during the requirement collections process. This enables avoiding additional costs resulting from adding new tasks or changing the existing ones. Obviously, modifications and improvements can be introduced at every stage of the project, but it costs. The later it happens, the higher the cost. This situation is presented nicely by the pain diagram below.
Own elaboration on the basis of the work of M. Żmigrodzki
Zarządzanie projektami dla początkujących: jak zmienić wyzwanie w proste zadanie
(Project management for beginners: how to turn a challenge into a simple task)
To summarise - preparation of cost estimation takes time (a lot rather than a little) and depends on a lot of different factors. Collection of requirements takes time, but it is necessary in order for you to receive a tool that is exactly what you need at conclusion of the project.
Preparation of an accurate price estimation is a very complex process with a lot of elements determining it. The teams of individual software houses may differ from one another, for example in terms of level of knowledge, experience or hourly rate, which is going to have an impact on the final price estimation. Moreover, every subcontractor takes into account slightly different elements when preparing a price estimate for a project. However, there are a few regular items that every price estimate should include:
However, this is not the end of the final project costs. The above price estimation regards only the works related to the software. You, however, have to remember to take into accounts the costs of e.g. hardware, certificates, fees for using third party services (e.g. online payments), hosting services, integration of the website with third party solutions, etc.
Each software house applies its own methods of estimating the price of an IT project implementation. There are many factors having impact on its final form. However, there are certain elements that a price estimate should include - they should be analysed in detail and the correctness of their preparation should be verified. What remains the most important is its accuracy and transparency, since it is these factors that the credibility of a software house is built upon. Remember, the least expensive does not have to mean the best.
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