Accurate and early estimating require the following:
Proper identification of the problem domain, including functional size and complexity
An assessment of the organization's capacity to deliver based upon known risk factors
Use of industry data points as necessary to provide delivery rates or as a point of comparison
As Robert Glass indicated in Building Software Quality, "If there is one management danger zone to mark above all others, it is software estimation."
Furthermore, an investment in skills training and risk profile development is critical. Project managers must be equipped with the proper tools and techniques necessary to accurately estimate projects. The return on that investment is obvious to any organization that has misspent dollars because of inaccurate estimating.