The answer to this question starts with a simple principle based notion.
Can you make a non-trivial (not de minimis) decision in the presence of uncertainty?
The #Noestimates advocates didn’t start there. They started with “Estimates are a waste, stop doing them.” Those advocates also started with the notion that estimates are a waste for the developers. Not considereing those who pay their salary have a fiduciary obligation to know something about cash demands and profit resulting from the investment work in the future.
The size of the “value at risk” is also the starting point for estimates. If the project is small (de minimis) meaning if we over run significantly no one cares, then estimating is likely a waste as well. No matter the size of the project, from multi-million’s to smaller, it's actually determined by “value at risk,” and that is determine by those paying not by those consuming. So the fact we work on larger projects does not remove the principle of “value at risk.” Your client’s (internal or external) V@R may be much different than mine – but it’s not our money.
Next comes an original post from Woody – “you can make decisions with No Estimates.” If we are having a principled based conversation (which NE’er don’t) then that statement violates the principles of Microeconomics. Making decisions in the presence of uncertainty (and I’m assuming all projects of interest have uncertainty), than estimates are needed to make decisions. Those decisions are based in MicroEcon on the Opportunity Cost and the probability of making the best choice for the project involves assessing the probability outcome of those choices, estimating is required.
Real options are a similar process in IT based on estimating. Vasco stated long ago he was using RO along with Bayesian Decision Making. I suspect he was tossing around buzz words without knowing what they actually mean, since we never saw an example of how he used RO when asked to show one.
From the business side, the final principle is Managerial Finance. This is the basis of business management of its financial assets. The balance sheet is one place these are found. Since the future returns from the expenses of today and the “potential” expenses of the future are carried in that balance sheet, estimating is needed there as well for the financial well being of the firm.
These three principles - Value at Risk, MicroEconomics of Decision Making, and Managerial Finance appear to be ignored by the NE advocates when they start with the conjecture that “decisions can be made without estimates,” and continuing on with “estimates are a waste of developers time, they should be coding not estimating.”
It’s the view of the world, that as a developer “it’s all about me.” Never looking at their paycheck and asking where did the money come from. That’s a common process and one I did when I started my career 35 years ago as a FORTRAN developer for Missile Defense radar systems and our boss had us get out our paychecks (a paper check in those days) and look at the upper left hand corner. “That money doesn’t come from the Bank of America, El Segundo, Blvd, Redondo Beach, it comes from the US Air Force. You young pups need to stay on schedule and make this thing work as it says in the contract.”
In the end the NE conversation can be about the issues in estimating and there are many - Steve McConnell speaks to those. I work large federal acquisition programs – IT and embedded systems. And many times the “over target baseline” root cause is from “bad estimating.” But the Root Cause of those bad estimates is not corrected by Not Estimating as #Noestimates would have us believe.
As posted on this blog before and sourced from the Director of “Performance Assessment and Root Cause Analysis,” unanticipated growth in cost has 4 major sources:
1. Unrealistic performance expectations – that will cost more money.
2. Unrealistic cost and schedule estimates – the source of poor estimating.
3. Inadequate assessment of unmitigated risk exposure.
4. Unanticipated technical issues.
Research where I work some times (www.ida.org) has shown these are core to problems of cost overruns in nearly every domain from ERP to embedded software intensive systems. It is unlikely those 4 root causes are not universal.
So what’s #NoEstimates trying to fix? They don’t say except - “exploring” new ways.” In what governance frameworks are they exploring? They don’t say. They don’t actually say much of anything, just “estimates are waste, stop doing them and get back to coding.”
As my boss in 1978 reminded us newly minted physical Master’s degree'd coder, “it ain’t your money it’s the USAF’s money, act accordingly – we need an estimate of this thing you’re building can be used to find SS-9’s coming our way?” Since then I’ve never forgotten his words, “business (in that case TRW) needs to know how much, when, and what, if it’s going to stay in business.”