Budgeting for Your Project

Andrew Savala
11 min readMar 30, 2021

Getting an estimate or even a fixed-bid quote on a software project is actually quite difficult. Either, you will need to spend a decent amount of time researching and planning to get an accurate bid, or you will get a ranged estimate. Here’s how you can plan to budget accurately.

Full Transcript Below:

Cris:

So Andrew, kind of talking about projects and when you’re planning out, obviously most customers are asking for estimations, or even when we’re working internally we’re having to estimate, but why is it so hard to make an estimate?

Andrew:

It makes it so hard because most of the time we’re presented with the tip of the iceberg when it comes to the requirements.

Cris:

Okay.

Andrew:

So kind of the napkin drawing of, this is what I want or this is what I’ve heard from potential customers and things like that. But we are typically missing so much information, that it’s hard to get a holistic feel of what the project is without really digging into the project. So it’s not that it’s so hard to estimate work, it’s hard to uncover all the work that’s there in order to estimate that.

Cris:

Yeah. And that’s obvious when we’re having a client conversation we’re asking someone, but even when we’re working internally, estimating internally is difficult too. It’s kind of a little bit of the same, or what makes it hard when we’re even estimating projects internally?

Andrew:

Well internally is easier because we’re essentially the client-

Cris:

Sure.

Andrew:

… in that scenario, right? So we have a better understanding of what needs to be done. But when you’ve got two parties coming together and the client that knows what their clients want but doesn’t in many cases have a deep technical understanding of what’s going to be involved, that’s why they’re coming to us. And then us having the technical understanding, but not really having the business knowledge of what their requirements are, how exactly their business operates, and so what we help do is just kind of marry those two worlds together where the client brings their expertise, we bring our expertise, we help them uncover the requirements and ask all the right questions and then ultimately produce an estimate that reflects at least what is known at that time.

Andrew:

And with estimating, there’s always new information that surfaces as the project goes on. Or as you’re getting things in front of your users, there’s things that you didn’t even know were requirements. Things that to your users were essential, but to you were maybe not totally obvious. So we can help address those things and do estimates for those things as the project goes on.

Cris:

Cool. And you touched on what’s essential, so we’ve mentioned many times. Best practice, of course, if you’re building something is build the MVP-

Andrew:

Right.

Cris:

… the minimum viable product.

Andrew:

Yeah.

Cris:

So what are the essential things? Just roughly, and this is obviously a broad question.

Andrew:

Sure.

Cris:

What is the rough cost of an MVP? And of course, any caveats that would go along with that question.

Andrew:

Yeah. So with the MVP, the intent is just to build just enough to really start getting feedback from your users. It’s not a full blown, full feature version of your app, it’s kind of a mini lite version of your app, or a minimum viable product of your app. And so it really depends case by case, but in many cases we kind of see around that $60,000 mark or so-

Cris:

Okay.

Andrew:

… is about what it takes to do an MVP. Now that could be greater. An MVP is not 10,000 users and 100 units deployed, it’s at a much smaller scale. So again, we kind of throw out that $60,000 number to help people know what sort of a budget they have and then we can help them calibrate that based on their exact requirements for the project. So if your MVP is, let’s say a mobile app that you just won on iOS, well, that’s going to be different than if it’s a mobile app that has to be on both iOS and Android. So again-

Cris:

Complexities.

Andrew:

Complexity, yeah. Complexity is always the factor. It’s going to come down to what’s the work involved to do this? What’s the complexity? How much support do you need from us? All that things.

Cris:

Yeah.

Andrew:

Yeah.

Cris:

So talking about, again, more complex projects and we’re focusing on estimates, not fixed bids. Fixed bids of course are different. We can roadmap, we can really dial things in, but the rough ballpark, that’s the estimate. So when you’re dealing with more complex projects, we generally give out a range. We’ve touched on it a little bit, so we don’t need to rehash, but why do we give a range when we’re dealing with more complex projects?

Andrew:

The range we give is really to encount for uncertainty, uncertainty in requirements in most cases. And the broader that range is going to get, the more uncertainty there is.

Cris:

Okay. Got you.

Andrew:

So let’s say that you come to us and you say, “well, I want to do this for my MVP.” And then there’s one feature that involves tying in with some third-party system. We think it’s going to be pretty straightforward, but we don’t have all the documentation on third party system, you don’t. You need an estimate of what you’re getting into to know if it’s even viable. And so we can make some assumptions about, “okay, probably we need a range of this to this.” That kind of thing. But if there’s big uncertainty, like maybe you’re doing some really R&D type, very experimental things that haven’t been done before, different things like that are more complex then you might see really big ranges. You might see hundreds of thousands of dollar ranges depending on the complexity of it.

Andrew:

So it’s all based on the amount of uncertainty we have about the complexity of what’s coming to the table. And there’s always going to be some amount of uncertainty, right? It doesn’t make sense to plan out every single detail, research every single thing in most cases and spend months doing that. We like to bring it down to a more reasonable three, four weeks sort of roadmapping, planning phase and then get you some estimates. And really we can get you estimates earlier than that. But the earlier the estimates come, the more uncertainty there’s going to be. If you need tighter estimates, then we need to spend more time going through those planning phases with you.

Cris:

Yeah. And ultimately, again, we’re trying to get something to market-

Andrew:

Ultimately, yeah.

Cris:

… so I’m guessing these estimates would includes maybe even phases of releases, that sort of thing. What is the importance of releasing things in phases? I know. I have my reasons, but what’s your insights? Why is it important to release a project out in phases as opposed to build it all, release it one time?

Andrew:

Right. Yeah. It’s important to release it in phases because it allows you to gather feedback sooner from your users. So the moment you get things in front of users, you’re going to start finding surprises of feedback that’s going to come and things that you realize you didn’t anticipate correctly. And so the sooner we can get feedback, the sooner we can make adjustments in the course.

Cris:

Yeah.

Andrew:

We don’t want to go all the way to our destination only to find out that that wasn’t the correct destination.

Cris:

We estimated it wrong. Our assumptions at the beginning were, “it’s going to be this.” And we got six months deep, didn’t release regularly and suddenly that’s not where we want to be.

Andrew:

Yeah. So if there’s real major features, a lot of times we’ll do releases around those. We’ll say, “okay, we want to get feedback on these features first, so let’s do a release that’s got these two or five major features in them…” Maybe that represents a month and a half or two months worth of work, do a release. That also allows the client to get feedback on it. And then we’ll have the next kind of group of features and do a release of that. That way we can chunk it up and have more of an iterative approach and also quicker feedback.

Andrew:

I keep saying feedback. The feedback thing’s really important. Feedback from our clients is important, we have methods of getting early feedback from clients. And then feedback from the client’s clients is important because ultimately our goal is not to deliver a project perfectly on time and on budget, it’s to deliver a project that exactly meets your needs. And adjustments need to be made to timeframes and budgets as we go through, you’re never going to know everything upfront. So that’s why we do multiple roles.

Cris:

Yeah. And there’s lots of parties involved. So an estimate is, it sounds like both the cost and the timeline of what it’s going to take. It’s best to have this broken out in phases so you’re getting that regular back and forth.

Andrew:

Back and forth, yeah.

Cris:

We’ll avoid the feedback word again.

Andrew:

Exactly.

Cris:

Back and forth. But one thing that we haven’t touched on it a little bit is if you’re not self-funding, you might be dealing with investors.

Andrew:

Right.

Cris:

And so there is another party that you’re really having to manage expectations-

Andrew:

Absolutely.

Cris:

… also, estimates are good. Realistically, it’s generally broken down into kind of friends and family investing and then angel investing. So what are the differences between that, just at a high level?

Andrew:

Sure. Well, It’s kind of like what it sounds like. Friends and family are your immediate close relationships, people that are putting money into your project. They’re very early investors. Angel investors would be outside investors who maybe you’re doing a seed round of funding, or series A, or something like that, but those are people that are not your friends and family. Those are the outsiders. Those are the people that are not investing just because they know and love you, and want to support your dreams, they’re investing because they want a real return on this.

Cris:

Yeah. So estimates on time and budget are probably going to be a little different when you’re dealing with friends and family investment rounds potentially versus an angel investment round.

Andrew:

Definitely more thorough due diligence. But even when you’re dealing with friends and family, if you need to raise $100,000 or $60,000, or a quarter million dollars, you want to know that before you really start fundraising. You don’t want to raise a chunk of money for friends and family only to find out that, “well, now I have to raise another, that much money again and now I just have to sit on your money until I can do that.” So it is important to have a idea of the future and what you’re getting into.

Cris:

Cool. Well, estimates obviously are going to help a lot. Any other things that viewers should be aware of when it comes to estimates, either creating them or receiving an estimate?

Andrew:

The more thought that you’ve put into what it is you want and what the user experience is going to be like, the more useful information you’re going to bring to the table. So you could do some real, basic planning things of even what the user experience is going to be like. Pen and paper stuff of, “this is what I’ve pictured the user first seeing. Not how it’s going to look in the sense of it’s got to be beautiful and things like that, but I picture them having these options on the screen, these kinds of buttons. They’re going to be able to click through that.” I like to start with those things purely written, just a bullet point outline like, “first screen you select between this and this. If they select this, that’s for this purpose. If they select this, it’s for that purpose.” And just kind of progressing through, just purely written out.

Andrew:

Because if you can’t even write that down, that means you haven’t thought it through well enough to really even know what you’re building. You might not know, should this be one screen or two screens, but at least just do your best and get it on paper. And then a next step might be to actually try to do some very basic pen and paper type drawings and try to kind of visualize that. And that’ll help you do things like uncover hidden requirements. As you’re drawing this out you might realize, “oh, thinking about my demographic, this really should be in English and Spanish.”

Cris:

The business level decisions and the ROI, and that kind of stuff is important to get onto the table because we can help with the, “how many screens should it be? What do you think it should feel like?” We’ve touched on user experience, user interaction, all that kind of stuff. We can help at that.

Andrew:

Yeah.

Cris:

But coming to the table with your idea down as much as you can on pen and paper of, “here’s what I’m trying to get done and accomplished, can you help me?” That’s going to help us immensely with building an estimate.

Andrew:

Absolutely. And when you start writing things out, it’s going to bring things to your mind that you’ve overlooked. And also, when you attempt to draw something… We’ve had many times where we’ve put visual, very basic mock-ups in front of a client and then they’ll say things like, “oh, well, how do they contact support if they need help?

Cris:

Mm-hmm (affirmative).

Andrew:

Or how do they switch it over to Spanish? Well, that was nowhere in the requirements they gave us, but once they saw even a very rough draft, it was apparent to them that, oh yeah, that’s really important. So any real basic stuff like that that you can bring to the table is going to help speed along the process.

Cris:

Yeah. Help speed the process along and help it be as close to accurate as possible.

Andrew:

Yeah.

Cris:

But as we’ve established, it’s an estimate not a fixed bid, so these are-

Andrew:

It’s a moving target.

Cris:

… moving targets and ranged ideas.

Andrew:

Yeah, exactly.

Cris:

Perfect. Well, anything else? Otherwise, I feel like we got it covered.

Andrew:

I feel like we covered it.

Alexandra:

Thanks so much for joining us for this episode of Bixly Tech Tuesday. If you have any questions at all about what we shared today, go ahead and leave that in the comment section down below. In our description, you’ll find a link for our free custom software guide that will give you a lot of information about how to plan for your next project, including a lot of the stuff that Andrew talked about today. And in addition, you can also check out our website, bixly.com and even sign up for a free one hour consultation with Cris to get the process started.

Originally published at https://blog.bixly.com on March 30, 2021.

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