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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:

  1. The work delivered will be late (somewhere between 4 & 16 times the original estimate)
  2. Work delivered closer to the delivery date will be of low quality.

Is this true?

What have your experiences been?

One Comment

  • Reply Oleg |

    I think that your statement is very true. Here is my experience…

    In my scrum team we are constantly struggling with underestimated features. As you described, the struggle is typically over user interface or user interaction. If we talk about UX first in great detail and have some prototyping done, then there are less surprises later on.

    I strongly believe that the team should focus on user interface, user experience, work flows. Even build a prototype. This will validate the solution early on and create less waste later in the project.


So, what do you think ?