Are estimates worthless?

If you take a picture while on vacation, is that picture yours? You are probably thinking: “What a stupid question. Of course it is mine!” But what if a stranger had asked you to take a picture of her with her camera? Is the picture still yours?

There are two lessons in this. The obvious one is that context is incredibly important in determining what is right and wrong. The more subtle lesson is that we have a tendency to underestimate the importance of context that we are not aware of. When you hear someone making a categorical statement that you know is wrong they are often victims of this tendency. Being “experienced” is in essence being knowledgeable of many contexts.

More and more people are coming to the conclusion that estimation is unproductive and in any case so error prone that it has no real value. “Why not use the time spent on estimation on more productive tasks?” they ask. In lean startup circles few people would question this approach. Time is of the essence and it is much better to focus on getting real feedback by building a minimal product than trying to guess how long it will take to build things. Of course, there is some implicit estimation going on. When figuring out which features to build first you need to weigh expected value against probable cost.

In the corporate world things are pretty different. Even if you can get someone to accept that estimates by themselves do not create value, few people will agree with the proposition that we should stop estimating before we build. “Ah, but they are just behind the times.”, you say. Or could it be that their context is different than yours?

If you read about innovation you will invariably come across descriptions of how hard it is to get new ideas accepted in a running business. This is commonly ascribed to either company culture or managers fear of risk. Once you get involved with a company that is struggling to innovate you realize that the real problem is something else: most significant changes to a business will also affect the suppliers and customers of the business. If these outside parties do not accept the change, it will fail. From this perspective it becomes much easier to understand why many businesses are reluctant to change. They can manage the own internals but they often have little power to decide on how their suppliers or customers operate.

By now you are probably wondering where I am going with all this. What does innovation have to do with estimation? It turns out that estimation has some interesting similarities to innovation. If you visit a software house that has been around for more than a few years you will probably find that estimates are an integral part of the sales process. Customers ask for features and get (binding) estimates back. Once an estimate is accepted the software house builds and delivers it. Does this process work? Just barely. Customers typically feel that they are being fleeced and the software house struggles with profitability. But it works well enough to make it difficult to convince either party that change is necessary.

So, the core problem in getting these software houses to accept that time spent on creating estimates is a form of waste is in explaining how they can get their customers to accept this. When they read exuberant blogs of lean startups that say you should stop estimating they think: “Sure, who needs customers?”. Their context is so different from the context of a startup that the advice sounds naive.

The only way to get someone in this context to embrace the idea of not estimating is to show them an alternative way of working with their customers that these customers will embrace. The irony is that since processes based on estimates often work poorly there is a lack of trust between customer and supplier. This makes it harder to convince the customer that an alternative process without estimates would be better.

I think that estimates are to a large degree a waste of time. At the same time I accept the fact that getting rid of estimates can be extremely hard, depending on your context. One strategy I have used when estimates are part of the sales process is to start with the small things. Many customers are willing to try out a system where all changes that can be performed in under a week are done without a prior estimate. The risk to the supplier is also limited here. If a developer spends a few days on a problem and then realizes that it will take more than a week the potential loss to the supplier is acceptable as long as this does not happen too often.

Niklas Björnerstedt

Posted on 2011.08.15 at 20:35

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