Introduction to Project Costing

1
Introduction to Project Costing
F23HF1 Tools Methodologies 1

• Monica Farrow EM G30
• monica_at_macs.hw.ac.uk
• Material on Vision
• Some material from Sommerville Ch26

2
Cost Breakdown Structure (CBS)
Stock Control System
People
Equipment
Sub-Contractors
Training
Maintain
...
Hardware
Software
Consumables
...
...
...
...
CBS are relevant to your first deliverable!
3
Fundamental estimation questions

• How much effort is required to complete an
  activity?
• How much calendar time is needed to complete an
  activity?
• What is the total cost of an activity?
• Project estimation and scheduling are interleaved
  management activities.

4
Software cost components

• Hardware and software costs.
• Travel and training costs.
• Effort costs (the dominant factor in most
  projects)
• The salaries of engineers involved in the
  project
• Social and insurance costs.
• Effort costs must take overheads into account
• Costs of building, heating, lighting.
• Costs of networking and communications.
• Costs of shared facilities (e.g library, staff
  restaurant, etc.).

5
Costing and pricing

• Estimates are made to discover the cost, to the
  developer, of producing a software system.
• There is not a simple relationship between the
  development cost and the price charged to the
  customer.
• Broader organisational, economic, political and
  business considerations influence the price
  charged.

6
Software pricing factors
7
Software productivity

• A measure of the rate at which individual
  engineers involved in software development
  produce software and associated documentation.
• Will vary according to experience and ability
• Essentially, we want to measure useful
  functionality produced per time unit.

8
Productivity measures

• Size related measures based on some output from
  the software process. This may be lines of
  delivered source code, object code instructions,
  etc.
• Function-related measures based on an estimate of
  the functionality of the delivered software.
  Function-points are the best known of this type
  of measure.
• Looking further at this in TM 2

9
Factors affecting productivity
10
Estimation techniques

• There is no simple way to make an accurate
  estimate of the effort required to develop a
  software system
• Initial estimates are based on inadequate
  information in a user requirements definition
• The software may run on unfamiliar computers or
  use new technology
• The people in the project may be unknown.
• Project cost estimates may be self-fulfilling
• The estimate defines the budget and the product
  is adjusted to meet the budget.

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Changing technologies

• Changing technologies may mean that previous
  estimating experience does not carry over to new
  systems
• Distributed object systems rather than mainframe
  systems
• Use of web services
• Use of Enterprise Resource Planning or
  database-centred systems
• Use of off-the-shelf software
• Development for and with reuse
• Development using scripting languages
• The use of CASE tools and program generators.

12
Estimation techniques
13
Estimate uncertainty
14
A comment . . .

• People are naturally optimistic
• Does your experience prove this wrt
• Computing projects
• Coursework in general
• D-I-Y
• Etc

15
Staffing requirements

• The number of staff required cant usually be
  computed by simply dividing the development time
  by the required schedule.
• The number of people working on a project varies
  depending on the phase of the project.
• The more people who work on the project, the more
  total effort is usually required.
• A very rapid build-up of people often correlates
  with schedule slippage.

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Staffing Costs for 2007

• Figures supplied by one of our industrial
  contacts
• Salaries for programmers average 25,000 -
  40,000
• Salaries for project managers average 40,000 -
  60,000
• Then
• Companies normally multiply salary by 1.5 2
• To include building, pension, NI costs etc
• Assume number of productive days 180 220 pa
• Divide salary by this to find daily rate
• Multiply by number of days needed
• Add at least 10 margin up to as much as the
  market will bear. Probably 20-40

17
Surveyor Pro Project Cost Estimate
Schwalbe IT Project management Ch 7
18
Group project staff time costs

• How to cost the software?
• We havent covered ways of measuring the
  productivity needed to produce software
• You are unlikely to have just produced a very
  similar system
• You can estimate how much time you will spend on
  this project, so you should probably base your
  costing on that.
• Consider whether your expensive project manager
  is spending 100 of their time being a manager?

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Group project staff time costs

• You have
• a time-limit
• 6 or 7 people
• The group project is equivalent to 1.5 modules,
  which should take at least 150 hours of effort
• Involves meetings, planning, developing, .
• Our head of school recommends that you put in
  extra work
• Students are likely to spend more time on the
  project
• Enthusiasm for the project (?)
• Programming can be absorbing / frustrating
• Allow time for holidays, other modules, exams,
  coursework, etc

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Key points

• There is not a simple relationship between the
  price charged for a system and its development
  costs.
• Factors affecting productivity include individual
  aptitude, domain experience, the development
  process, the project size, tool support and the
  working environment.
• Software may be priced to gain a contract and the
  functionality adjusted to the price.
• The time to complete a project is not
  proportional to the number of people working on
  the project.

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Next . . .

• Read relevant parts of Sommerville Ch26
• Moving onto design
• System Development lifecycles
• A brief look at the rest of UML
• An introduction to patterns via MVC
• And then implementation
• Tools Version control
• Open source
• Scripting