Your Estimates Suck

Key takeaways

Humans are inherently poor at estimating complex tasks, especially in new or innovative contexts.
Switch from estimates to setting budgets and appetites, which helps manage scope and expectations more effectively.
Maintaining a steady rhythm of shipping—akin to industrial baking—prevents stagnation and preserves momentum.
Short planning cycles of six weeks improve decision accuracy and enable flexible course corrections.
Often, it's better to cut scope than to extend deadlines, and sometimes projects should be canceled if they cannot be completed within reasonable bounds.
Discipline, such as stop-loss strategies, helps avoid sunk cost fallacies and keeps projects on track.
Consistent, incremental progress builds trust and enables sustained product improvement over many years.

Summary

The Flaws of Estimating in Business and Software Development

The hosts discuss how humans are inherently bad at estimating the time and effort required for complex, novel tasks across various industries, including construction and software development. They emphasize that despite efforts and methodologies to improve estimates, the fundamental flaws persist due to human optimism and the unpredictable nature of problem-solving. The podcast advocates for abandoning precise estimations in favor of managing budgets and appetites to better control project outcomes.

Adopting Budgets and Appetites Over Estimates

Instead of traditional estimates, 37signals uses budgets and appetites—broad time frames within which work should be completed—to plan projects. By setting a fixed amount of time—like three weeks—and focusing on delivering value within that period, teams can maintain flexibility, reduce stress from missed estimates, and improve delivery consistency. This approach encourages trade-offs and scope cuts rather than endless attempts to meet inaccurate predictions, ultimately leading to better project flow and more reliable shipping schedules.

Maintaining Momentum and Avoiding Deadlocks

The hosts compare software development to industrial baking, emphasizing that the key to efficiency is keeping the process moving without interruption. They caution against the pitfalls of scope creep, perfectionism, and constantly pushing back project deadlines, which can lead to stagnation and loss of momentum. They highlight the importance of discipline, such as implementing stop-loss strategies, and the necessity of letting go of non-essential features to keep projects on track. The importance of continuous shipping and learning from each cycle is stressed as fundamental for sustaining progress.

Short-Term Planning and Future Flexibility

The discussion highlights the advantages of short planning cycles—roughly six weeks—as opposed to long-term forecasts. This approach allows teams to adapt quickly, course-correct based on current information, and reduce uncertainties inherent in long-term predictions. The hosts underscore that this incremental planning aligns with human limitations in forecasting and enables more accurate decision-making, leading to consistent progress over years without the chaos often associated with big, unmanageable projects.

Key Takeaways and Practical Lessons

The core lessons emphasize that estimating is fundamentally flawed and that managing scope, timelines, and budgets within fixed periods leads to more reliable outcomes. The importance of focusing on shipping good, workable products promptly and trusting the process over unrealistic predictions is stressed. Building sustainable momentum, trading scope for speed, and embracing iterative planning are presented as practical, proven strategies for successful product development and business growth.

Show notes

"Getting out of estimates and getting into appetites and budgets is the single most important thing that we have instituted," - David Heinemeier Hansson

Today, Jason Fried and David Heinemeier Hansson, the co-founders of 37signals, discuss their chapter in Reworkon why estimating is not the road to completing projects and what has helped them get things done in their business for over twenty years.

Show Notes:

[00:42] - David shares why it's time to accept that we're awful at estimating.

[03:27] - Why estimating is 'an amazing example of the human optimism to overcome its own fundamental flaws in a way that's just wholesomely unrealistic.'

[04:48] - What 37signals does instead of estimating as relayed in Shape Up.

[05:49] - Jason asks how much you are willing to spend (or lose) in gambling (and software development projects).

[08:13] - The worst situation to be in for rational decision-making.

[09:00] - Why it's vital to stick to your limits.

[10:29] - "Getting out of estimates and getting into appetites and budgets is the single most important thing that we have instituted as a barrier for our software development process over all these years."

[12:47] - In software development, no one—from the owner of the company to the end user—gets everything they want; staying within your parameters is about trading concessions.

[14:15] - You need to keep the engine moving because software development is like baking bread on an industrial scale.

[16:19] - You produce what you practice.

[16:57] - You don't cut corners or quality, you cut scope, and if you can't, you scrap the project.

[18:15] - Losing the right things prevents you from missing out on other opportunities.

[19:48] - Forecasting the next ten years, six weeks at a time.

[20:33] - Shortening planning cycles improves your ability to determine your next steps with more accurate information.

[21:15] - 'We're making a ton of progress with a small team with a product that's been around for 18 years - so it works!'

[23:21] - Why keep doing things that don't work?

Links and Resources:

Rework

Shape Up
Dev.37signals
Sign Up for 30-day FREE trial at Basecamp.com

37signals on YouTube
The REWORK podcast

The 37signals Dev Blog

@reworkpodcast on Twitter

@37signals on Twitter