Cost Estimation Methods

Topics: COCOMO, Software engineering, Project management Pages: 5 (1449 words) Published: February 29, 2012
G Different Methods for Cost Estimation

Expert Judgment Method
Expert judgment techniques involve consulting with software cost estimation expert or a group of the experts to use their experience and understanding of the proposed project to arrive at an estimate of its cost. Generally speaking, a group consensus technique, Delphi technique, is the best way to be used. The strengths and weaknesses are complementary to the strengths and weaknesses of algorithmic method. To provide a sufficiently broad communication bandwidth for the experts to exchange the volume of information necessary to calibrate their estimates with those of the other experts, a wideband Delphi technique is introduced over standard Deliphi technique. Steps using this estimating method:

1.Coordinator presents each expert with a specification and an estimation form. 2.Coordinator calls a group meeting in which the experts discuss estimation issues with the coordinator and each other. 3.Experts fill out forms anonymously

4.Coordinator prepares and distributes a summary of the estimation on an iteration form. 5.Coordinator calls a group meeting, specially focusing on having the experts discuss points where their estimates varied widely. 6.Experts fill out forms, again anonymously, and steps 4 and 6 are iterated for as many rounds as appropriate. The wideband Delphi Technique had been used in a number of studies and cost estimation activities. It has been highly successful in combining the free discuss advantages of the group meeting technique and advantage of anonymous estimation of the standard Delphi Technique. The advantages of this method are:

The experts can reason in differences between past project experience and requirements of the proposed project. •The experts can reason in project impacts caused by new technologies, architectures, applications and languages involved in the future project and can also reason in outstanding personnel characteristics and interactions, etc.

The disadvantages include:
This method cannot be quantified.
It is hard to document the factors used by the experts or experts-group. •Expert may be some biased, optimistic, and pessimistic, even though they have been decreased by the group consensus. •The expert judgment method always compliments the other cost estimating methods such as algorithmic method.

Top-Down and Bottom-Up Methods
Top-Down Estimating Method
Top-down estimating method is also called Macro Model. Using top-down estimating method, an overall cost estimation for the project is derived from the global properties of the software project, and then the project is partitioned into various low-level components. The leading method using this approach is Putnam model. This method is more applicable to early cost estimation when only global properties are known. In the early phase of the software development, it is very useful because there is no detailed information available. The advantages of this method are:

It focuses on system-level activities such as integration, documentation, configuration management, etc., many of which may be ignored in other estimating methods and it will not miss the cost of system-level functions. •It requires minimal project detail, and it is usually faster, easier to implement. The disadvantages are:

It often does not identify difficult low-level problems that are likely to escalate costs and sometime tends to overlook low-level components. •It provides no detailed basis for justifying decisions or estimates. Because it provides a global view of the software project, it usually embodies some effective features such as cost-time trade off capability that exists in Putnam model. Bottom-up Estimating Method

Using bottom-up estimating method, the cost of each software components is estimated and then combines the results to arrive at an estimated cost of overall project. It aims at constructing the estimate of a...

References: 1. Schwalbe, K “Managing Information Technology Projects”, Sixth Edition.
2. Gray | Larson “Project Management: The Managerial Process”, Forth Edition.
3. Cost Estimating Techniques [Web:]
http://www.enge.vt.edu/terpenny/Smart/Virtual_econ/Module3/module3_frames.html
[Date of access: 12 Feb. 2012]
4. 451 Cost and Effort Estimation [Web:]
http://ksi.cpsc.ucalgary.ca/course/451-96/mildred/451/CostEffort.html
[Date of access: 12 Feb. 2012].
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