How Do I Compare Development Estimates?

We've all been there.  You've spent 3 weeks in meetings hammering out the long overdue website rebuild and e-commerce project that you've needed for the past 2 years.  You created a 4 page, bulleted list of items you know you need, and sent it out to three development firms for estimates.  Now you have 3 estimates that are thousands of dollars apart, and you have no idea why they are so different.  Where do you start?  Can you go with the cheapest, or is cheap just cheap?  Why are they cheap?  Is the most expensive really the best?

I get asked this question all the time by clients as we begin the estimation process for the website they need.  I've also had this question afterward from clients who want to know if my estimate is higher than another because we've added more to it.  In an effort to help, I've compiled the following list of questions you should ask yourself, and your developer, before determining which estimate is right for you.

What to Ask Yourself:
  1. Has my developer really taken the time to review my specific needs?  You can start by considering if they asked any follow-up questions.  Rarely does anyone ever describe everything perfectly in the first phone call, and never does a developer think of every eventuality while they are asking you about your project.  There really should be a question or two except in the simplest of requests.
  2. Are they willing to provide a general description in writing of the scope of work for my review to show that they have really captured everything I was looking for, or do I feel that there are gaps in the understanding of my project?  Some gaps are normal in the estimation phase.  Neither you nor your developer know all the details up front, but you should not be left feeling that there are significant pieces missing from your scope.  Especially the kind of gaps that could add a lot of time and money to the project.
  3. Do you feel your developer was diligent in trying to determine your needs?  Only you can define if you achieved a comfort level that the developer spent adequate time with you to flesh out your project's needs.  If you're not comfortable, ask questions or move on.
What to Ask Your Developer:
  1. Have you done this type of work before?  You can ask this question multiple times, as depending on the type of build, you may have many different technologies involved along the way.  Your developer may not have experience in all of them, but you'd want them to have experience with most.
  2. Can you explain your estimation process?  You need to understand what will be in the estimate.  Are they going to throw out a general ballpark, that means basically nothing until after you sign a contract when the amount somehow increases?  Or will they review your scope and give you a specific idea of the items in the estimate so you can adjust the scope accordingly?
  3. Based on recent projects, do you feel you consistently come in at or near your estimate range?  This is an important question, as sometimes you will receive a low estimate, but it turns out the developer often leaves things out, or is constantly adding to the cost because of overruns and miscommunication, and you'll end up spending more in the end.
  4. How do you identify additions to scope and how do you handle billing for out of scope requests?  Every project has at least some additional items arise.  It's important to know up front how these will be handled.
  5. Do you find your projects have relatively few, like 10% or so, additions to scope, or many, say 50% or greater?  This will help you determine whether your developer typically estimates low and then adds in a bunch of items that increase cost, either by intent or because they were left out in the beginning by failure to adequately review the scope.  A good company will be willing to share this information and be honest about it.
Your website is an important investment for your company, and we want your website build to be a great experience and become the money making, profitability engine it is supposed to be.  Hopefully, these questions will help you achieve that goal!

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