The He177 was begun at about the same time as the British heavy bombers built to Specifications B.12/36 and P.13/36.
14.05.39 first flight of the Short Stirling.
It entered service (with No 7 Squadron, RAF) in August 1940 – 15 months later.
Its first operation was a raid on Rotterdam on the night of 10th-11th February 1941 – 21 months after its first flight.
27.07.39 first flight of the Avro Manchester.
It entered service (with No 207 Squadron, RAF) in November 1940 – 16 months later.
Its first operation was a raid on Brest on the night of 24th-25th February 1941 – 19 months after its first flight.
25.10.39 first flight of the Handley Page Halifax.
It entered service (with No 35 Squadron, RAF) in December 1940 – 14 months later.
Its first operation was a raid on Le Havre on the night of 11th-12th March 1941 – 17 months after its first flight.
That’s an average of 15 months from first flight to service entry and 19 months from first flight to first operation. 2 prototypes of each aircraft were built.
19.11.39 first flight of the Heinkel He177 – according to the Putnams on German Aircraft of the Second World War . . .
8 He177 prototypes (V1 to V8) were purpose built and the other 16 (V9 - V24) were conversions of pre-production & production aircraft.
Some He177A-1s were delivered to I./KG40 in July 1942 for operational trials and on 28.08.42 . . . “one of them dropped a single 250kg (550lb) bomb on the Broad Water district of Bristol, killing 45 people and injuring a further 66—the worst single bomb incident suffered by the city during the war.”
If its development had proceeded as smoothly as its British rivals service entry (probably with KG40) would have been in April 1941 (15 months after its first flight) and its first operation would have been in August 1941 (19 months after its first flight).
However, the interval between first flight and service entry might have been reduced because 8 He177 prototypes were built instead of 2 each of the British heavy bomber prototypes so the development flying might have been completed sooner. And the first flight might have been several months earlier ITTL due to the change of engines.