Did you know that around 66% of software projects fail due to missed deadlines and exceeded budgets?
The main reason is ‘Poor estimation’, when the team misestimates time or budget, and promises too much to deliver.
That’s where we use Software estimation techniques. In simple terms, Software estimation techniques are methods to make more accurate predictions about time, money, and effort using realistic numbers.
After plenty of trial and error, we have found 5 software estimation techniques that work for us, from 40% to 85%.
In this guide, I’m sharing those methods, so let’s get started.
Quick Reference: 5 Essential Software Estimation Techniques
- Planning poker: This technique involves team-based estimation, where members use cards to estimate how complex a task is. This helps avoid biased or individual guesses.
- Function points: This technique measures software size by counting functional features from a user’s perspective. Like input or output, which helps estimate effort more objectively.
- Wideband Delphi: This method gathers anonymous expert estimates through multiple rounds to reach a refined consensus, perfect for big, complex projects needing multiple expert inputs.
- Three-point Estimation: This method uses three estimates for each task: optimistic (best case), pessimistic (worst case), and most likely. To calculate an average estimate that considers risks and uncertainties.
- Story Points: This method gives each task a score based on effort, complexity, and risk. It doesn’t use hours or days. Instead, it shows how much harder or easier one task is compared to another. Teams in Agile use this to plan work flexibly and simply.
What are Software Estimation Techniques?
Software estimation techniques are structured methods used to predict how much time, effort, and resources are needed to complete the project.
The main tasks involved are:
- Planning and overseeing test execution
- Designing test scenarios and analyzing results
- Carrying out tests
- Checking if the exit criteria are met
- Wrapping up with test closure and final approval
If you’re interested in how these fit into modern workflows, check out how these techniques work hand-in-hand with agile methodologies to keep projects flexible and on track.
What to Estimate in Software Testing?
Software test estimation means figuring out the time, cost, people, skills, and risks needed to finish testing well. These factors help make testing smooth and effective.
- Time Required: Estimating how long testing tasks will take is key. It keeps the testing work in line with the project schedule and helps avoid delays.
- Cost Required: Planning the budget for testing keeps the project affordable. It also makes it easier to measure the return on investment (ROI).
- Resources Required: This means finding out how many team members you need and what tools, both hardware and software, are required to finish the testing cycle.
- Skills Required: You must check the skill levels and knowledge of the team. The right skills ensure the tests are done in the correct way.
- Risks Involved: Spotting risks early helps you prepare for them. This makes it easier to reduce problems and keep the testing work on track.
By estimating all these factors, you can plan better, use resources wisely, and handle risks across the whole testing process.
Top 5 Software Estimation Techniques for SaaS Companies
Comparison Table: Software Estimation Techniques at a Glance
| Technique | Best For | Accuracy | Effort Required | Team Size |
|---|---|---|---|---|
| Planning Poker | Agile teams, feature estimation | 70-85% | Low | 3-9 people |
| Function Points | Feature-rich applications | 75-90% | High | Any size |
| Three-Point | Projects with uncertainty | 65-80% | Medium | Any size |
| Story Points | Sprint planning | 60-75% | Low | 3-9 people |
| Wideband Delphi | Wideband Delphi | 80-95% | High | 5-15 experts |
1. Planning Poker:
Planning Poker is a group estimation technique used by Agile teams to decide how much effort a task or feature will take.
This technique promotes teamwork, values every opinion, and helps uncover hidden complexities.
Best For: It works best for small to medium teams and projects where the scope isn’t fully clear.
How does it work?
Each team member gets cards with numbers (usually a Fibonacci sequence). The product owner explains the task, then everyone secretly picks a card to show their estimate. All cards are revealed at once to avoid bias.
If estimates vary, team members with the highest and lowest numbers explain their thinking. The group discusses and repeats the process until everyone agrees.
Pro Tip: For remote teams, tools like Planning Poker or [Scrum Poker Online] work great. We use them weekly.
2. Function Points Analysis:
Function Points Analysis (FPA) is an easy way to measure how big and complex the software is by looking at what the user can see and do. It was created by Allan Albrecht at IBM in 1979 and refined by the International Function Point Users Group (IFPUG), it remains valuable for feature-heavy SaaS products.
The Five Components:
Think of these as the building blocks of software functions:
- External Inputs (EI): Places where users enter data (forms, fields)
- External Outputs (EO): Information users see (reports, dashboards)
- External Inquiries (EQ): User lookups or searches
- Internal Logical Files (ILF): Data storage within the system (databases, caches)
- External Interface Files (EIF): Data shared with other systems (APIs, webhooks)
How it works:
All the parts are counted and weighted by their complexity (e.g., simple, average, complex). These are multiplied and added together to obtain the total project functional points.
Next, you estimate the amount of effort by applying the rate of productivity of the team (hours per function point).
Calculation Formula:
Total Function Points = Σ(Component Count × Complexity Weight)
Effort (person-hours) = Total Function Points × Productivity Rate
Practical Application:
Let me walk you through a real example—a CRM feature we built last year:
- 5 simple input forms = 5 × 3 = 15 points
- 3 average complexity reports = 3 × 5 = 15 points
- 2 complex search functions = 2 × 6 = 12 points
- 1 customer database = 1 × 10 = 10 points
- Total: 52 Function Points
If your team takes 8 hours per point, that’s about 416 person-hours of work.
Why it’s useful:
- Works with any technology or platform
- Gives a clear way to measure software size
- Makes estimates and resource planning more accurate
- Improves communication between business and tech teams
It takes some practice to use, but Function Point Analysis is still one of the best methods for estimating big, complex projects.
3. Three-Point Estimation:
The Three-Point Method estimates how long a project will take by considering three scenarios:
- Optimistic (O): Everything goes perfectly
- Pessimistic (P): Everything that can go wrong
- Most Likely (M): our best guess based on experience.
Instead of just picking one number, you calculate the weighted average using the PERT formula:
This method is helpful for uncertain or complex tasks because it considers possible risks and helps plan better. However, it requires enough information about the task to work well.
Example Calculation:
We recently integrated a new payment gateway:
- Best case: 40 hours (the docs were accurate and the API just worked!)
- Likely case: 60 hours (reality check)
- Worst case: 100 hours (the API was a dumpster fire)
Expected Time = (40 + 240 + 100) / 6 = 63.3 hours
Standard Deviation = 10 hours
So roughly 63 hours, plus or minus 10. I love having that range, it makes conversations with stakeholders so much more honest.
4. Story Points:
Story points are everywhere in agile, and there’s a reason for that. According to VersionOne’s State of Agile Report, 87% of agile teams use them. They measure relative complexity, not hours, which takes pressure off and actually improves accuracy. Go figure.
Key Principles:
- Points = effort + complexity + risk
- Everything’s relative to a baseline story
- Velocity emerges over time; you gotta be patient
How it works:
- Find a simple story everyone agrees is a “1-pointer”
- Size everything else relative to that baseline
- Track completed points each sprint
- Let velocity stabilize (usually takes 3-4 sprints)
Velocity Calculation:
Team Velocity = Average Story Points Completed Per Sprint
Sprint Capacity = Team Velocity × Focus Factor (usually 0.6-0.8)
Why it helps:
It maintains a fair estimate, avoids pressure, and provides teams with a realistic pace to plan around.
5. Wideband Delphi:
Wideband Delphi is a group-based, expert-driven estimation method used for big, complex projects. It helps teams predict how long things will take or how much effort is needed, especially when guessing wrong could be risky.
Process Steps:
- Step 1: Prep (1–2 days before): Break work into clear tasks, share documents, and decide on units like story points or person-days.
- Step 2: Round 1 (10–20 min): Experts privately make their own guesses about each task.
- Step 3: Reveal (5–10 min): The guesses are then shown to everyone. You just see the smallest, biggest, middle, and average guesses.
- Step 4: Discussion (10–20 min per item): Now, finally, everyone talks about each other’s guesses and their differences.
- Step 5: Round 2 (10 min): After talking, experts privately review their guesses again until estimates are aligned or after 3 rounds.
- Step 6: Repeat: Continue rounds until estimates align or after 3 rounds.
- Step 7: Finalize: Choose median or consensus value, and record assumptions and confidence.
When to Use:
- Projects that could make or break your company
- Cross-functional initiatives with lots of dependencies
- When wrong estimates would be costly or dangerous.
Closure
Getting your estimates right can save you from missed deadlines, unhappy clients, and stressed teams. The techniques we talked about are not just ideas, they actually work.
You do not need to change everything at once. Start with one method, try it for a few weeks, and see how much smoother your projects go.
It is a good estimate that will result in a great plan, satisfied clients, and a fearless team. In 2026, it is important to use these methods to ensure that projects are on track and to ensure the growth of the business.
