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244: How Do You Do Engineering Estimates

In today’s episode, Steli and Hiten discuss the importance of arriving at accurate engineering estimates while doing product development. Typically, larger organizations that have a set process tend to be better at giving out estimates than smaller ones. Having experienced, engineering managers take care of this business function leaves the business owners free to handle what they need to—such as sales and/or marketing. Tune-in to learn how to give out accurate estimates and why knowing the value of your dollar will result in quicker, smarter and more cost effective product development.

Time Stamped Show Notes:

00:35 – Today’s Startup Chat is about accurately doing engineering estimates for product development

00:44 – Today’s focus is on software, as hardware is another ball game altogether

01:16 – Information on engineering estimates does not exist on the internet

01:26 – Hiten sent out an email to his entire mailing list quizzing them on how they go about doing engineering estimates

01:43 – There is no single way of doing engineering estimates, and some people do not get them at all

01:56 – Subscribe and be a part of the Product Habits mailing list

02:21 – Steli is constantly thinking of ways to better product development

02:37 – Larger organizations seem to be better at product development than smaller ones

03:15 – Analyzing all the responses, Hiten concludes that people who are doing product development the best have a process around it

03:41 – No generic process can be applied to all products; people figure out their own process as they develop their product

04:26 – For all of Hiten’s organizations, a simple process is in place for making engineering estimates

04:50 – It’s critical that engineers on the team understand the value of why estimates are run; cannot do prioritization of initiatives unless you understand how long the process will take

05:26 – Intent is not to hold engineers accountable for the estimate; main reason is to figure out what you can work on and how long it is going to take

06:17 – Waste of resources and rise in hourly costs if there is no estimate

06:53 – Go into the minute details to prepare an accurate estimate

07:28 – Companies like BaseCamp do not prefer to work on projects in excess of 6 weeks since larger projects tend to spiral out of control

07:50 – In early days, product development is generally on track if you are working with experienced engineers and using small, iterative work cycles

08:14 – As your customer base and your team grows, more variables kick in, and product development becomes more difficult

09:33 – Steli’s team is careful to not give out estimates if the project is really complex; break the project into smaller cycles if there are unanswered questions

10:21 – Steli’s team has gotten better at giving estimates, but they still have yet to perfect it

10:40 – Hiten has 3 engineering managers for each of his companies whose main responsibility is to make sure they ship on time—this allows Hiten to concentrate on the product, marketing and sales

11:47 – Sometimes you can be pleasantly surprised as development time will be really quick

12:30 – As companies scale up, there is a cultural shift and people try to better the process

13:00 – Sit down with the engineering team in order to remove objections about providing estimates

13:20 – Once you conduct some high level research and determine the probable future of the product, go to engineering and define a time which will let you determine how fast you can move

13:49 – Create smarter opportunities by bringing engineering into the product development prioritization process

14:58 – In Hiten’s organizations, any task that takes more than a day is torn apart in an attempt to make it quicker


Key Smash Notes In This Episode

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