Software Economics

Factors that can be abstracted with software economics

1] The size of the end product quantified in terms of
the number of source instructions or the number of
function points
2 ] The process used to produce the end product ,ability
of the process to avoid non-value-adding activites
3 ] The capabilities of software engineering personnel
4] The environment made up of the tools and
techniques to support efficient software development
5] The required quality of the product

 The relationships among these parameters and the

estimated cost can be written as follows:

Effort=
(Personnel)(Environment)(Quality)(SizeProcess)

Evolution of software economics over three

generations

A ] Conventional : 1960s and 1970s

Organizations used custom tools ,custom processes , and custom
components built in primitive languages
Cost ,schedule and quality objectives were always underachieved
B ] Transition : 1980s and 1990s
Organizations used more repeatable processes and off-the shelf tools
custom components built in higher level languages

C ] Modern practices :2000 and later :Software production

Use of managed and measured processes
70%off the shelf components

 Pragmatic software cost estimation

Three deciding factors

1] Which cost estimation model to use
2] Whether to measure software size in source lines of
code or function points
3 ] what constitutes a good estimate
Most real-world use of cost models is bottom-up
(substantiating a target cost) rather than a top-down
(estimating the should cost)
Figure 2-3 illustrates the pre-dominant practice :The
software project manager defines the target cost of the
software ,then manipulates the parameters and sizing
until the target cost can be justified

Good software cost estimate has the following attributes :

1] It is conceived and supported by the project manager ,
architecture team , development team and test team
2] It is accepted by all stakeholders
3] It is based on well-defined software cost model
4] It is based on a database of relevant project experience
5] It is defined in enough detail so that its key risk areas
are understood