Cone of uncertainty:

Early in a project, specific details of the nature of the software to be built, details of specific requirements, details of the solution, project plan, staffing, and other project variables are unclear. The variability in these factors contributes variability to project estimates -- an accurate estimate of a variable phenomenon must include the variability in the phenomenon itself. As these sources of variabiility are further investigated and pinned down, the variability in the project diminishes, and so the variability in the project estimates can also diminish. This phenomenon is known as the “Cone of Uncertainty” which is illustrated in the following figure. As the figure suggests, significant narrowing of the Cone occur during the first 20-30% of the total calendar time for the project.


The horizontal axis contains common project milestones such as Initial Concept, Approved Product Definition, Requirements Complete, and so on. The vertical axis contains the degree of error that has been found in estimates created by skilled estimators at various points in the project. The estimates could be for how much a particular feature set will cost and how much effort will be required to deliver that feature set, or it could be for how many features can be delivered for a particular amount of effort or schedule.

As you can see from Figure 1, estimates created very early in the project are subject to a high degree of error. Estimates created at Initial Concept time can be inaccurate by a factor of 4x on the high side or 4x on the low side (also expressed as 0.25x, which is just 1 divided by 4). The total range from high estimate to low estimate is 4x divided by 0.25x, or 16x.


The Cone narrows only as you make decisions that eliminate variability. As Figure 2 illustrates, defining the product vision (including committing to what you will not do), reduces variability. Defining requirements—again, including what you are not going to do—eliminates variability further. Designing the user interface helps to reduce the risk of variability arising from misunderstood requirements. Of course, if the product isn’t really defined, or if the Product Definition gets redefined later, then the Cone will get wider, and estimation accuracy will be poorer.