Factors Affecting the Project Cost Estimation

Gillian Harper By Gillian Harper  |  Oct 31, 2023  |  Business Strategy Startups
Important Factors Affecting Project Cost Estimation

Project cost estimation is one of the major concerns for most enterprises whether startups or established firms. The reason is that in most cases, the budget could direct the product outcome because the resources and tools are arranged and expected as per the money spent on its design, development, and deployment. There are various techniques followed to estimate overall project costs and one must consider all factors before finalizing their budget balance sheet for project outsourcing.

What are the Factors That Affect the Project Cost Estimation?

As stated earlier, there is no one common factor that decides the overall cost or budget of the project. There are many factors that collectively contribute in shaping up the cost of any product or software solution. We have listed below some of the most important ones.

Scope of the project

The scope of the project is concerned with all aspects of a project like features, limitations, database, resources, timelines, deliverables, and other constraints.

While analyzing the scope of the project, the project owners segregate the features of the product into must-haves and nice-to-haves. This segregation will help the business owners identify the features they can remove and cannot remove whenever the budget changes.

Sometimes the scope of the project changes during the development process. While some changes are small, like adjusting the fonts or colors, others can be big like adding an extra feature or an extra page or screen. While it is normal to expect some changes, the nature of the changes affects the project’s initial cost estimate.

Sometimes the developers need to write a large piece of code to inculcate the required changes. This leads to a significant addition in developer hours which ultimately escalates the cost of the project.

Complexity of features

The features and functionalities that the project owners want to include in the software application affect the calculation significantly. While some project features are easy to implement using the existing tools and libraries, others may take days or weeks to build.

It would cost even more to include the advanced functions listed below –

  • IoT integration
  • AR or VR integration
  • Big data analytics
  • Audio or video streaming
  • Machine learning
  • Online chats
  • Artificial intelligence
  • Real-time data synchronization
  • Custom design and animation
  • Blockchain
  • Third-party services integration
  • Complex backend
  • Chatbot

The complexity of project features plays a massive role in increasing the costs of the product. To keep the costs under control, project owners can remove the functions that are not necessary for the first version of the project.

The product with only the most vital features necessary to function is called an MVP (Minimum Viable Product). With an MVP, the product developers start with only the minimum set of features that form the core of the project and leave the extra functions for later updates. This way, the business owners would be able to get a more realistic cost estimate. Before that, the developers must be sure about the project’s long-term goals.

Business owners must ask themselves questions such as:

  • How much scope does the MVP have for adding features in the future?
  • Is the MVP enough to satisfy all the basic needs of the users?
  • How much does it cost to develop an MVP?
  • Is it viable to build an MVP for my project requirements?

One can take the help of professional IT product developers to get a better estimate for their MVP. An MVP is one of the best ways through which startups can reduce development costs.


The design costs form a significant portion of the total budget of the project. Outstanding design for an IT product or digital platform has become more of a necessity now. Things like beautiful transitions of UI components into animations will make the design of a product more appealing. At the same time, with the increasing complexity of project design, the costs will also soar.

The business owner should ask the following questions to get a better estimate of the design cost.

  • How many pages or screens will the project need to design?
  • How many design iterations are expected?
  • Is design branding required?
  • Will it be simple or complex?

The design has the power to make or break the user experience, and hence it matters as much as the functionalities and features of the project. This is the reason many companies prefer to build a customized design experience. However, the customized design experience comes at a cost depending upon the level of personalization.

UI/UX Design Principles: Guide to Perfect App Designing Process

Backend architecture

The backend architecture is considered to be the backbone of any digital product. Without a robust backend structure, the front end won’t perform flawlessly. The backend architecture is responsible for everything that happens in the project, right from storing and managing data to implementing the business logic.

The more complex the project is, the more time it will require to build the back end; in addition, it eventually turns into more cost. Apart from complexity, the number of expected users will also influence the cost of setting up the backend architecture.

The higher number of expected users will shoot the cost of setting up the backend architecture. The number of expected users and the project complexity will also determine the product maintenance. The developers must choose proper backend architecture to ensure that the maintenance of the product is easy.

Maintenance and updates

Many people think that once the product is released, the job is done. It is not true. In fact, one of the biggest challenges project owners face is the cost required to keep their products up and running which means the maintenance cost; it includes bug fixing and periodic updates or upgrades. Any digital product would require regular maintenance and updates to ensure that it functions smoothly. Therefore, maintenance is another factor that influences the costs of project. While estimating project maintenance costs, business owners must keep in mind that the project will incur maintenance costs as long as it is functional.

The maintenance of IT projects includes the following things.

Operating system updates

New versions of operating systems both for mobile as well as desktops are released regularly. The developers also need to upgrade the product when the operating system changes. This involves time and effort on the part of the developers, and hence while getting the estimate of the project cost, the project owners should include the cost of upgrading the project to the latest operating system.

Library, framework, and tool updates

Like operating systems, the frameworks, third-party services, tools, and libraries using which the product was built also get updated regularly.

Bug fixing

Fixing bugs is one of the most critical maintenance activities. Even large companies like Google and Facebook face the problem of bugs. The QA specialists find and solve the bugs and errors to improve the performance of the product.

Third-party services

A lot of third-party services like payment gateways, push notification services, and maps have paid services. This is because they have special features and functions they release or allow only to paid users. Regular charges are to be paid (though some apps charge for once and all) to keep the third-party services keep running.

Although it is impossible to estimate the number of minor code modifications and bug-fixing required in the project, the business owners can arrive at a pretty accurate cost estimate after careful calculations.

Experienced IT product development companies can help a business estimate maintenance costs. This is because these companies would have worked on many projects and would know a broad range of maintenance costs associated with certain kinds of projects.

Many developers, while giving cost estimates, assume that the project’s scope won’t change and the project will not require too much maintenance. To ensure that one gets an accurate estimate, the project owners must ask the developers to include estimated maintenance costs for the product.

Factoring Factors!

So, now you are acquainted with all the project cost estimation factors using which you can assume or anticipate the budget close to if not accurate for your project. Nevertheless, it is always insisted that you talk to your tech partner and discuss your business ideas depending on which they may carry feasibilities and provide you with tentative project costs. And if you don’t have any idea on how to get a credible tech partner, ask or find on TopDevelopers.co, an online directory that is trusted by many business owners.

Gillian Harper Gillian Harper   |  Oct 31, 2023

A professionally engaged blogger, an entertainer, dancer, tech critic, movie buff and a quick learner with an impressive personality! I work as a Senior Process Specialist at Topdevelopers.co as I can readily solve business problems by analyzing the overall process. I’m also good at building a better rapport with people!


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