It is well-known that software engineering is at the lead of the services that use outsourcing and outside contractors. Statistics say that the global contract value ranges from $63.5 billion to $159.1 billion and it includes software products development services as well.
So, estimation of your software product development plays a crucial role in your business planning and you should choose an agency or a contractor with the right approach for estimation of a software project.
Total contract value of the IT outsourcing market (2000-2019 years)
Besides, the common issues of the most famous failed projects faced are delivery delays and cost overruns. These disadvantages had 7 out of 12 projects. So, the lack of information can lead to inaccurate estimation of time and cost of the project and, as a result, to the failure in meeting these requirements.
There is a formula that experienced engineers use when estimating a software project: they define time, cost, and effort and double these estimations. However, for making an accurate estimation it is necessary to have proper documentation, and specified requirements for the project. One more significant moment is that the estimation shouldn’t be made too early.
Let’s look at the four major aspects of the software project estimation process:
A proper estimation can answer these questions, that is why the right choice of methodology and approach to the estimation and further management of your software product development is the vital thing.
Software project estimation in a non-Agile environment
Non-Agile practices are notable for fixed functionality and scope and variable time and cost. This peculiarity leads to a number of issues:
This approach works well for well-defined projects with a small scope and low complexity. In this case, we talk about creating an accompanying solution like a landing page, a simple software solution for automating a certain process. Such projects have supplementary character and don’t solve major business tasks.
Software project estimation according to Agile principles
Our business plans can be changed because of external and internal processes in the software development
The cost of the project depends on two elements: time and people. Increasing time causes increased costs for keeping people for a longer period of work. Involving more people in your project, increase the cost of the project and the software product itself. These are the reasons why the Agile approach uses the principles of fixed time and number of developers and variable scope.
The successfully completed project should result in a software product that perfectly meets customers’ needs and brings desired value to the business. 
Software project estimation based on Agile methodology keeps a focus on the following things:
Agile practices allow for widening or lessening the duration and scope of the project in line with the customer’s business needs. Besides, there is always a possibility of adding new parts to the scope at a suitable moment.