Information Technology Reference
In-Depth Information
development team must pay out. These include employee salaries, hardware and
software costs, and overhead costs such as rent and utilities. In other words, the
internal cost is the actual cost required to develop the software. The external cost,
then, includes both the internal cost, as well as any additional profit that the
development team intends to generate from the client. The difference between the
internal and external costs varies from project to project and from organization to
organization. The amount of profit added by a development firm in order to cal-
culate the external cost is based on many factors. This is a key component in a
client's decision to accept one firm's bid over that of another. For this reason, cost
estimation and the determination of an appropriate profit margin are the deter-
mining factors of whether or not the project in question will even exist.
The proper estimation of a project's timeline is equally as important as financial
projections. The development team is responsible for establishing a development
schedule, which provides the client with both a final delivery date, as well as a
timeline by which it can judge the development team's progress. Failure to stick to
this schedule on the part of the developer can lead to a number of negative
consequences. These can include the loss of future business or in some cases, may
even lead to the application of financial or legal penalties.
Before a specific software engineering firm is selected and a project is begun,
the organizations bidding for the project develop initial time, or duration, and
financial estimates, and then submit these to the client. From these estimates, the
client can determine the feasibility and potential profit of the product in question.
If the client chooses to undertake the project, they will then select an organization
based on the list of projections. From this point on, it is the responsibility of the
chosen development firm to uphold the contract constituted by those estimates.
Right away, the selected firm begins to develop more detailed estimates, which
will be used to plan the upcoming development process. Throughout the devel-
opment cycle, additional estimates are created to continually guide the project. As
we can clearly see, software engineering cost estimates are not just a tool for initial
conjecture, but rather, they are also a continually updated progress report, and an
adaptable, multipurpose planning tool.
4.2 Staying on Task and on Schedule
In the
Sect. 4.1.3
, we explained the importance of effective planning and accurate
cost estimation. These two development aspects are vital to the software engi-
neering project, and set the development team on track to realizing the final goal.
They are, however, only the beginning of the process. After plans are laid out and
estimates are generated, either at the start of the project or periodically throughout,
the development team must constantly work to ensure that the plan is being
followed, and that the costs are not being exceeded. The
Sect. 4.2.1
discusses the
critical concepts related to ensuring a software project is completed on time and
within budget.
