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NEED FOR COST ESTIMATION?
Cost estimation may be needed to establish a
budget for the project or to set the price for
the software for a customer
If the Organization is unsure of its cost
estimation, it may increase the price by some
contingency over & above its normal profit.
Actual cost must not exceed the estimate.
Estimating the cost of a software product is
one of the most difficult and error-prone
tasks in SE. It is difficult to make an accurate
cost estimate during the planning phase of
software development, since so many
unknown factors will be there.
Estimation should be updated regularly.
It can be either,
It first focuses on system level costs, such as
the computing resources and personnel
requirements, as well as the cost of
configuration managements, quality
assurances, system integration, training etc.
It first estimates the cost to develop each module or subsystem. Those cost are
combined to arrive at overall estimate.
TOP-DOWN VS. BOTTOM-UP
Top-down estimation has an advantage of
focusing on the system level costs, but may
overlook at some of the various modules to
Bottom-up estimation emphasizes the cost
associated with developing the individual
system components, but may fail to account
for system-level costs, such as configuring
systems and quality control.
Top-down estimation under-estimate the cost
of solving difficult technical problem
associated with specific component.
Bottom-up estimation is comparatively more
TYPES OF COST ESTIMATIONS
Delphi Cost Estimation
Work Breakdown Structure
Algorithmic Cost Models
Constructive cost model (COCOMO )
The mostly widely used cost estimation
It is an inherently top-down estimation
It relies on the experience, background,
and business sense of one or many key
people in the organization.
The system to be developed is a process
control system that may be similar to that of
Will have similar controlling function but may
have to control more activates.
It cost less and saves time.
May use same devices( computer, controlling device, same experts…)
Can reuse much of the low-level codes.
To get more contracts the organizations may quote a lower price targeting high profits
Organizations charges less to win a contract and after winning, charges high for the
Advantage of expert judgment, namely ,
experience, also be a obligation…
The expert may be confident that the
previous projects was the similar one.
Overlook at some of the various modules
to be developed or some factors that
make the new projects significantly
Experts making estimate may not have the
experience in similar projects.
In order to compensate for the factors , group
of experts prepare a consensus estimate.
This minimizes the individual oversight and
lack of familiarity with particular projects.
Come with more optimistic estimation.
Group members may be less than candid
due to some pressures.
Dominance of an assertive group member.