The present disclosure provides a method and system that estimates size, effort and FTE of software Managed Services Production Support (MS-PS) engagements. It provides a method and system to categorize all applications in various bundles based on multiple parameters. Further the invention provides a method and system to estimates size of each bundle at an application level based on a set of variables. Further, the invention provides a method and system for utilizing the estimated MS-PS engagement size and organizational baseline productivity information for estimating the MS-PS engagement base effort which can then be adjusted based on multiple factors to arrive at the final effort. It estimates full time equivalent (FTE) of the MS-PS engagement using the final estimated effort of the applications and additional FTE impacting parameters. The invention furthermore provides a method and system to optimize the estimated FTE for a bundle and view the overall unutilized effort.