Software Estimation – The next level

by T. Dekkers

The Total Cost Management (TCM) Framework of the Authority for the Advancement of Cost Engineering (AACE) International is an Integrated Approach to Portfolio, Program and Project Management. It provided a structured, annotated process map that explains each practice area of the cost engineering field in the context of its relationship to the other practice areas including allied professions. In other words; it is a process for applying the skills and knowledge of cost engineering.

A key feature of the TCM Framework is that it highlights and differentiates the main cost management application areas: project control and strategic asset management. In this paper the focus is on project control.

In the TCM Framework, the Basis of Estimate (BOE) is characterized as the one deliverable that defines the scope of the engagement and ultimately becomes the basis for change management. When prepared correctly, any person with (capital) project experience can use the BOE to understand and assess the estimate, independent of any other supporting documentation. A well-written BOE achieves those goals by clearly and concisely stating the purpose of the estimate being prepared (i.e. cost/ effort/duration study, project options, funding, etc.), the project scope, cost basis, allowances, assumptions, exclusions, cost risks and opportunities, contingencies, and any deviations from standard practices.

A BOE document is a required component of a cost estimate. Because of its relevance in the set of AACE International recommended practices (RP) a BOE document is present. This template provides guidelines for the structure and content of a cost basis of estimate.

Although not always happy with the opinion that the Software Services Industry is different than other industries, analysis of the BOE shows that the structure is applicable but needs to be adapted to meet the practise in Software Services. In addition, the terminology used does not reflect the activities, components, items, issues, etc. of the Software Services Industry.

The tailored version; Basis of Estimate – As Applied for the Software Services Industries provides guidelines for the structure and content of a cost basis of estimate specific to the software services industries (i.e. software development, maintenance & support, infrastructure, services, research & development, etc.).

With this BOE a structure is provided for further standardization of the Estimation Process, a more consistent use of metrics (sizing, effort, schedule, quality), transparent options for control (benchmark, audit, bid validation) and a common approach on assumptions and associated risks.

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