“Estimation is bullshit.” David Heinemeier Hansson (of Ruby on Rails fame) doesn’t mince words. He takes pride in being controversial, and some of his advice is useless or downright dangerous for most organizations. But his point of using budgets instead of estimates is solid.
The reason is it forces everyone to think in terms of business outcomes instead of cost. Instead of asking the impossible “how long will this take” question, you start by determining what a certain feature is worth. If it is worth $200K, you might be willing to spend $50K on trying to build it. If your team hasn’t been able to build the feature after they’ve spent the budget, you kill that project and try something else.
I encourage you to read Wojtek Borowicz’ interview with David Heinemeier Hansson.
If you are involved in the day-to-day running of IT development as a program manager, architect, project leader, or scrum master, I encourage you to read the whole “Shape Up” book. It’s available for free online.
