Category: Software Cost Estimates

As part of our research related to early acquisition lifecycle cost estimation for the Department of Defense (DoD), my colleagues in the SEI's Software Engineering Measurement & Analysis initiative and I began envisioning a potential solution that would rely heavily on expert judgment of future possible program execution scenarios. Previous to our work on cost estimation, many parametric cost models required domain expert input, but, in our opinion, they did not address alternative scenarios of execution that might occur from Milestone A onward.

By law, major defense acquisition programs are now required to prepare cost estimates earlier in the acquisition lifecycle, including pre-Milestone A, well before concrete technical information is available on the program being developed. Estimates are therefore often based on a desired capability--or even on an abstract concept--rather than a concrete technical solution plan to achieve the desired capability. Hence the role and modeling of assumptions becomes more challenging. This blog posting outlines a multi-year project on Quantifying Uncertainty in Early Lifecycle Cost Estimation (QUELCE) conducted by the SEI Software Engineering Measurement and Analysis (SEMA) team. QUELCE is a method for improving pre-Milestone A software cost estimates through research designed to improve judgment regarding uncertainty in key assumptions (which we term program change drivers), the relationships among the program change drivers, and their impact on cost.

Department of Defense (DoD) programs have traditionally focused on the software acquisition phase (initial procurement, development, production, and deployment) and largely discounted the software sustainment phase (operations and support) until late in the lifecycle. The costs of software sustainment are becoming too high to discount since they account for 60 to 90 percent of the total software lifecycle effort.

The Government Accountability Office (GAO) has frequently cited poor cost estimation as one of the reasons for cost overrun problems in acquisition programs. Software is often a major culprit. One study on cost estimation by the Naval Postgraduate School found a 34 percent median value increase of software size over the estimate. Cost overruns lead to painful Congressional scrutiny, and an overrun in one program often cascades and leads to the depletion of funds from others. The challenges encountered in estimating software cost were described in the first postof this two-part series on improving the accuracy of early cost estimates. This post describes new tools and methods we are developing at the SEI to help cost estimation experts get the right information they need into a familiar and usable form for producing high quality cost estimates early in the life cycle.

The Government Accountability Office (GAO) has frequently citedpoor cost estimation as one of the reasons for cost overrun problems in acquisition programs. Software is often a major culprit. One study on cost estimation by the Naval Postgraduate School found a 34 percent median value increase of software size over the estimate. Cost overruns lead to painful Congressional scrutiny, and an overrun in one program often leads to the depletion of funds from another. This post, the first in a series on improving the accuracy of early cost estimates, describes challenges we have observed trying to accurately estimate software effort and cost in Department of Defense (DOD) acquisition programs, as well as other product development organizations.