Cost Analysis In Software Projects
Formalis performs detailed and
scientific cost analysis with alternatives using bottom-up
estimating, parametric estimating, analogous estimating, pert
analysis, Monte Carlo simulation methods, including expert
assessment.
Cost analysis may be defined as performing
a comprehensive scientific analysis for estimation of required
resources, time and budget in order to complete activities for
developing of a new product or service in a
project.
Two basic inputs of cost analysis process are project scope and work breakdown structure.
Project Scope
Project scope is
a formal document which describes the business solution that
customer needs.
Project targets, product and
services obtained at the end of the project, basic requirements related to product and services, assumptions take place in this document.
Work Breakdown Structure
Work
packages required to be completed
during realization of the project are built. Each work package is decomposed into activitiy levels where duration, resource and cost analysis might be done.
Details of work during cost analysis are described below:
Alternative
Approach in Cost Analysis
Alternative approaches are produced
according to cost producing activities and implementation of
activities for the purpose of having the project cost in terms
of time and resources at the optimum level.
It is
possible to obtain a result in a shorter period by getting
consultancy services if needed. It may be considered to
get ousourcing services for some parallel work with the
aim of shortining the
project duration in time-critique applications. A present application may be customized instead of having a new design-development activity in order to create an application.
Formalis provides and shares altenative cost approaches according to project requirements, assumption and limits as stated above.
Project Cost
For determination of
project budget, the project scope, work breakdown structure of
the project, and the project schedule management plan is taken
as a reference.
In the project schedule management
plan, the resources and the time required to complete an
activity is defined. There are standard cost rates determined
according to such parameters as type, expertise field, work
assigned in the project, knowledge and experience level of the
resources in the project. Total cost of the project is
calculated using standard cost rates.
Project Duration
Project duration estimation is the work of estimating the period required for completing each work package determined with work breakdown structure. While executing this study, estimation techniques are used systematically:
- Bottom-up Estimation: While
estimating the period of a work package, the work package is
decomposed into activity details. Completion durations are
estimated for each activity. Durations estimated for all
activities are combined to determine the total duration of
the work package.
- Parametric Estimation: This is
the study of estimating the duration required for completing
a work package, based on a realized duration required for
completing for small part of the work package (production
rate).
- Analogous Estimation: In case
that the project to be performed is similar to the projects
realized in the past, previous project cost/duration data
constitutes basis for the estimation. Formalis measures and
saves project duration and cost data in activity detail for
each project that has been executed. These data are then
used for measuring the efficiency and productivity of the
process and the project team in the projects.
- PERT Analysis: Estimations of period required for
performing a certain activity are produced with optimistic,
pessimistic and normal estimations. Weighted averages are
taken, to provide a more accurate estimation for the
activity duration.
- Experts Assessment: At the stage of duration estimation of
the project, software architects are included in the
study. Expert opinions and estimations are taken into
account.
- Monte Carlo Analysis: This is a
simulation method applied for determining the total period
of the project.
Formalis efficiently uses the estimating methods according
to the requirements of the project, thus performing a
realistic and formal analysis of project completion duration.
Critique Path Method is applied while
calculating the total time cost. Activities with priority and
activities that may delay the project time are defined.
Additional precautions to complete these activities in a
shorter period are defined and included in project
time/resource mangement plan.
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