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SOFTWARE

ENGNEERING

Cost estimation

Vijay k
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.


Cost estimation

 It can be either,
 Top–down estimation.
 Bottom-up estimation.
Top-down estimation

 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.
Bottom-up estimation

 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 be developed.

 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 expensive.
Types of cost estimations
 Expert Judgment
 Delphi Cost Estimation
 Work Breakdown Structure
 Algorithmic Cost Models
 Constructive cost model (COCOMO )
Expert judgment
 The mostly widely used cost estimation
technique.

 It is an inherently top-down estimation


technique.

 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 previous ones.

 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.
 Marketing opportunity
 To get more contracts the organizations
may quote a lower price targeting high
profits later.

 Requirement volatility
 Organizations charges less to win a
contract and after winning, charges high
for the charges.
Advantage
 Advantage of expert judgment, namely ,
experience, also be a obligation…

 The expert may be confident that the


previous projects was the similar one.
Disadvantage
 Overlook at some of the various modules
to be developed or some factors that
make the new projects significantly
different.

 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.


THANK YOU!

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