Software Cost

Estimation
Seth Bowen
Samuel Lee
Lance Titchkosky
2
Outline
Introduction
Inputs and Outputs
Methods of Estimation
COCOMO
Conclusion
3
Cost Estimation Is Needed
55% of projects over budget
24 companies that developed large distributed
systems (1994)
53% of projects cost 189% more than
initial estimates
Standish Group of 8,380 projects (1994)
4
Cost Estimation
An approximate judgment of the costs for a
project
Many variables
Often measured in terms of effort (i.e., person
months/years)
Different development environments will
determine which variables are included in the
cost value
Management costs
Development costs
Training costs
Quality assurance
Resources
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Cost Estimation Affects
Planning and budgeting
Requirements prioritization
Schedule
Resource allocation

Project management
Personnel
Tasks
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Cost Estimation During the
Software Life Cycle
Cost estimation should be done throughout the
software life cycle to allow for refinement
Need effective monitoring and control of the
software costs to verify and improve accuracy of
estimates
At appropriate level of detail
Gathering data should not be difficult
Success of a cost estimate method is not
necessarily the accuracy of the initial estimates,
but rather the rate at which estimates converge
to the actual cost
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Who is the Estimator?
Someone responsible for the implementation
Can compare previous projects in organization to
current project
Usually experienced
Someone from outside the organization
Can provide unbiased estimate
Tend to use empirical methods of estimation
Difficulties:
Lack of confidence that a model will outperform an expert
Lack of historical data to calibrate the model
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General Steps and Remarks
Establish Plan
What data should we gather
Why are we gathering this data
What do we hope to accomplish
Do cost estimation for initial requirements
Decomposition
Use several methods
There is no perfect technique
If get wide variances in methods, then should re-
evaluate the information used to make estimates
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General Steps and Remarks (cont.)
Do re-estimates during life cycle
Make any required changes to
development
Do a final assessment of cost estimation
at the end of the project
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Software Cost Estimation
Process
Definition
A set of techniques and procedures that is
used to derive the software cost estimate

Set of inputs to the process and then the
process will use these inputs to generate
the output
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Inputs and Outputs to the
Estimation Process
Classical view of software estimation process [Vigder/Kark]
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Inputs and Outputs to the
Estimation Process (Cont.)
Actual cost estimation process [Vigder/Kark]
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Cost Estimation Accuracy
To determine how well a cost estimation
model predicts
Assessing model performance
Absolute Error = (E
pred
E
act
)
Percentage Error = (E
pred
E
act
) / E
act
Mean Magnitude of Relative Error


1
n
.
Epred Eact ( )
Eact
|
\

|
.
|
i =1
i =n

i
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Cost Estimation Methods
Algorithmic (Parametric) model
Expert Judgment (Expertise Based)
Top Down
Bottom Up
Estimation by Analogy
Price to Win Estimation
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Algorithmic (Parametric) Model
Use of mathematical equations to perform
software estimation
Equations are based on theory or historical data
Use input such as SLOC, number of functions to
perform and other cost drivers
Accuracy of model can be improved by
calibrating the model to the specific environment
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Algorithmic (Parametric) Model
(Cont.)
Examples:
COCOMO (COnstructive COst MOdel)
Developed by Boehm in 1981
Became one of the most popular and most transparent cost
model
Mathematical model based on the data from 63 historical
software project
COCOMO II
Published in 1995
To address issue on non-sequential and rapid development
process models, reengineering, reuse driven approaches,
object oriented approach etc
Has three submodels application composition, early design
and post-architecture
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Algorithmic (Parametric) Model
(Cont.)
Putnams software life-cycle model (SLIM)
Developed in the late 1970s
Based on the Putnams analysis of the life-cycle in
terms of a so-called Rayleigh distribution of project
personnel level versus time.
Quantitative software management developed
three tools : SLIM-Estimate, SLIM-Control and
SLIM-Metrics.
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Algorithmic (Parametric) Model
(Cont.)
Advantages
Generate repeatable estimations
Easy to modify input data
Easy to refine and customize formulas
Objectively calibrated to experience
Disadvantages
Unable to deal with exceptional conditions
Some experience and factors can not be quantified
Sometimes algorithms may be proprietary
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Expert Judgment
Capture the knowledge and experience of the
practitioners and providing estimates based
upon all the projects to which the expert
participated.
Examples
Delphi
Developed by Rand Corporation in 1940 where participants
are involved in two assessment rounds.
Work Breakdown Structure (WBS)
A way of organizing project element into a hierarchy that
simplifies the task of budget estimation and control
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Expert Judgment (Cont.)
Advantages
Useful in the absence of quantified, empirical data.
Can factor in differences between past project
experiences and requirements of the proposed
project
Can factor in impacts caused by new technologies,
applications and languages.
Disadvantages
Estimate is only as good experts opinion
Hard to document the factors used by the experts
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Top - Down
Also called Macro Model
Derived from the global properties of the
product and then partitioned into various
low level components
Example Putnam model
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Top Down (Cont.)
Advantages
Requires minimal project detail
Usually faster and easier to implement
Focus on system level activities
Disadvantages
Tend to overlook low level components
No detailed basis
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Bottom - Up
Cost of each software components is
estimated and then combine the results to
arrive the total cost for the project
The goal is to construct the estimate of the
system from the knowledge accumulated
about the small software components and
their interactions
An example COCOMOs detailed model
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Bottom Up (Cont.)
Advantages
More stable
More detailed
Allow each software group to hand an
estimate
Disadvantages
May overlook system level costs
More time consuming
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Estimation by Analogy
Comparing the proposed project to
previously completed similar project in the
same application domain
Actual data from the completed projects
are extrapolated
Can be used either at system or
component level
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Estimation by Analogy (Cont.)
Advantages
Based on actual project data
Disadvantages
Impossible if no comparable project had been
tackled in the past.
How well does the previous project represent
this one
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Price to Win Estimation
Price believed necessary to win the
contract
Advantages
Often rewarded with the contract
Disadvantages
Time and money run out before the job is
done
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COCOMO 81
COCOMO stands for COnstructive
COst MOdel
It is an open system First published by
Dr Barry Bohem in 1981
Worked quite well for projects in the
80s and early 90s
Could estimate results within ~20% of
the actual values 68% of the time
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COCOMO 81
COCOMO has three different models (each one
increasing with detail and accuracy):
Basic, applied early in a project
Intermediate, applied after requirements are specified.
Advanced, applied after design is complete
COCOMO has three different modes:
Organic relatively small software teams develop
software in a highly familiar, in-house environment
[Bohem]
Embedded operate within tight constraints, product is
strongly tied to complex of hardware, software,
regulations, and operational procedures [Bohem]
Semi-detached intermediate stage somewhere
between organic and embedded. Usually up to 300
KDSI
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COCOMO 81
COCOMO uses two equations to calculate effort in man months
(MM) and the number on months estimated for project (TDEV)
MM is based on the number of thousand lines of delivered
instructions/source (KDSI)
MM = a(KDSI)
b
* EAF
TDEV = c(MM)
d
EAF is the Effort Adjustment Factor derived from the Cost
Drivers, EAF for the basic model is 1
The values for a, b, c, and d differ depending on which mode
you are using
Mode a b c d
Organic 2.4 1.05 2.5 0.38
Semi-detached 3.0 1.12 2.5 0.35
Embedded 3.6 1.20 2.5 0.32
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COCOMO 81
A simple example:
Project is a flight control system (mission critical) with
310,000 DSI in embedded mode
Reliability must be very high (RELY=1.40). So we
can calculate:
Effort = 1.40*3.6*(319)
1.20
= 5093 MM
Schedule = 2.5*(5093)
0.32
= 38.4 months
Average Staffing = 5093 MM/38.4 months = 133
FSP
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COCOMO II
Main objectives of COCOMO II:
To develop a software cost and schedule
estimation model tuned to the life cycle
practices of the 1990s and 2000s
To develop software cost database and tool
support capabilities for continuous model
improvement

From Cost Models for Future Software Life Cycle Processes:
COCOMO 2.0," Annals of Software Engineering, (1995).
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COCOMO II
Has three different models:
The Application Composition Model
Good for projects built using rapid application
development tools (GUI-builders etc)
The Early Design Model
This model can get rough estimates before the entire
architecture has been decided
The Post-Architecture Model
Most detailed model, used after overall architecture
has been decided on
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COCOMO II Differences
The exponent value b in the effort equation is
replaced with a variable value based on five
scale factors rather then constants
Size of project can be listed as object points,
function points or source lines of code (SLOC).
EAF is calculated from seventeen cost drivers
better suited for today's methods, COCOMO81
has fifteen
A breakage rating has been added to address
volatility of system
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COCOMO II Calibration
For COCOMO II results to be accurate the model
must be calibrated
Calibration requires that all cost driver parameters be
adjusted
Requires lots of data, usually more then one
company has
The plan was to release calibrations each year but so
far only two calibrations have been done (II.1997,
II.1998)
Users can submit data from their own projects to be
used in future calibrations
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Importance of Calibration
Proper calibration is very important
The original COCOMO II.1997 could
estimate within 20% of the actual values
46% of the time. This was based on 83
data points.
The recalibration for COCOMO II.1998
could estimate within 30% of the actual
values 75% of the time. This was based
on 161 data points.
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Is COCOMO the Best?
COCOMO is the most popular method however
for any software cost estimation you should
really use more then one method
Best to use another method that differs
significantly from COCOMO so your project is
examined from more then one angle
Even companies that sell COCOMO based
products recommend using more then one
method. Softstar (creators of Costar) will even
provide you with contact information for their
competitors products
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COCOMO Conclusions
COCOMO is the most popular software
cost estimation method
Easy to do, small estimates can be done
by hand
USC has a free graphical version available
for download
Many different commercial version based
on COCOMO they supply support and
more data, but at a price
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Conclusions
Project costs are being poorly estimated
The accuracy of cost estimation has to be
improved
Data collection
Use of tools
Use several methods of estimation
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References
Boehm B., Clark B., Horowitz E., Madachy R., Shelby R., Westland C.
(1995). Cost Models for Future Software Life Cycle Processes: COCOMO
2.0, Annals of Software Engineering.
http://sunset.usc.edu/research/COCOMOII/Docs/stc.pdf.
Boehm B., Clark B., Horowitz E., Madachy R., Shelby R., Westland C.
(1995). An Overview of the COCOMO 2.0 Software Cost Model.
http://sunset.usc.edu/research/COCOMOII/Docs/stc.pdf.
Boehm B., Chulani S., Clark B. (1997). Calibration Results of COCOMO
II.1997. http://sunset.usc.edu/publications/TECHRPTS/1998/usccse98-
502/CalPostArch.pdf.
Boehm B., Chulani S., Clark B. (1997). Calibrating the COCOMO II Post
Architecture Model.
http://sunset.usc.edu/Research_Group/Sunita/down/calpap.pdf.
Boehm B., Chulani S., Reifer D., The Rosetta Stone: Making COCOMO 81
Files Work With COCOMO II.
http://sunset.usc.edu/publications/TECHRPTS/1998/usccse98-
516/usccse98-516.pdf.
Chulani, S. (1998). Software Development Cost Estimation Approaches A
Survey. IBM Research.
Humphrey, W.S. (1990). Managing the Software Process. Addison-Wesley
Publishing Company, New York, NY.
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References
Hussein, A. (2001). Introduction to Software Process Management.
University of Calgary, Calgary, Canada.
http://sern.ucalgary.ca/courses/SENG/621/W01/intro.ppt.
Londeix, B. (1987). Cost Estimation for Software Development. Addison-
Wesley Publishing Company, New York, NY.
Pressman, R.S. (2001). Software Engineering: A Practitioners Approach.
McGraw-Hill Higher Education, New York, NY.
Vigder, M. R. and Kark, A. W. (1994). Software Cost Estimation and
Control. Software Engineering Institute for Information Technology.
http://wwwsel.iit.nrc.ca/seldocs/cpdocs/NRC37116.pdf.
Wu, L. (1997). The comparison of the Software Cost Estimating Methods.
University of Calgary, Calgary, Canada.
http://sern.ucalgary.ca/courses/seng/621/W97/wul/seng621_11.html.

Basic COCOMO Software Cost Model.
http://www.jsc.nasa.gov/bu2/COCOMO.html.
COCOMO 2, Softstar Systems.
http://www.softstarsystems.com/cocomo2.htm.
Answers to Frequently Asked Questions, Softstar Systems.
http://www.softstarsystems.com/faq.htm.
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Questions and Discussion