8. Software Cost Estimation

Loading

To estimate the effort and time use with the identified project activities, project managers must estimate the answers to the following questions:

(i) How much effort is required to complete an activity?

(ii) How much calendar time is needed to complete an activity?

(iii) What is the total cost of an activity?

Project estimation and project scheduling are carried out together. However, some cost estimation may be required at an early stage of the project before detailed schedules are drawn up. These estimates maybe needed to establish a budget for the project or to set a price for the software for a customer.

Once a project is underway, estimates should be updated regularly. This assists with the planning process and allows the effective use of resources. If actual expenditure is significantly greater than the estimates then the project manager must take some action. This may involve applying for additional resources for the project or modifying the work to be done.

There are three parameters involved in computing the total cost of a software development project:

(i) Hardware and software costs including maintenance,

(ii) Travel and training costs,

(iii) Effort costs (the costs of paying software engineers).

For most projects, the dominant cost is the effort cost. Computers that are powerful enough for software development are relatively cheap. Although travel costs can be significant where a project is developed at different sites, they are relatively low for most projects. Furthermore, the use of electronic mail, fax and teleconferencing can reduce the travel required.

Effort costs are not simply the costs of the salaries of the software engineers involved in the project. Organizations compute effort costs in terms of overhead costs where they take the total cost of running the organization and divide this by the number of productive staff. Therefore, the following costs are all part of the total effort cost:

(i)  Costs of providing, heating and lighting office space;

(ii) Costs of support staff such as accountants, secretaries, cleaners and so on;

(iii)Costs of networking and communications;

(iv)Costs of central facilities such as a library, recreational facilities and so on;

(v) Costs of pensions, health insurance and so on.

There are various techniques of software cost estimation. In preparing an estimate, several of these should be used.

If the estimates diverge widely, this means that inadequate estimating information is available.