Definition:
The Cone of Uncertainty is a graphic representation of the increasing accuracy for estimates as the details of the project are known over time. Managers or any stakeholders us this to guide estimates and manage expectations. It describes the evolution of the amount of uncertainty during a project which not only decreases over time, but diminishes its impact by risk management and helps in decision making.
At the beginning of the project little is know about the product so estimates are subjected to large uncertainty somewhere around 4 times the actual time taken. As more research and development begins more information is learnt about the product, development team get more clarity, impediments surfaces which helps in knowing the unknowns where estimates fall more into line with reality.
Further Reading:
Book: Agile Estimating and Planning Book by Mike Cohn
Book: The Art of Doing Twice the Work in Half the Time by Jeff Sutherland
