Page 134 -

7 - PROJECT COST MANAGEMENT

and tools for software development. For other projects, infrastructure resources and tools may be seen as direct
charges to the software project, or assessed on a per seat basis for the project team.

• Project direct-cost factors. The dynamics of individual performance, team skills, size and complexity of the
software product, and integration with other systems are primary direct-cost factors for software projects.
Other direct costs may include specific software tools required by the customer, travel for a geographically
distributed software team or remote customer, and hardware and/or operating systems specified by the
customer. Hardware simulators may be needed to support development and testing of the software.
• Fiduciary requirements and government regulations. Meeting statutory or regulatory constraints may
need to be included in a software project cost estimate.
• Standards compliance. Some software projects may include costs for conforming to standards that are 7
part of the organizational governance framework. However, conformance to process standards is usually
considered to reduce project risk and cost of rework, resulting in lower overall project life cycle costs.

• Organizational changes. The cost of organizational changes that may impact the actual cost of a
software project is typically included in the cost estimate.

• Cost and value risk. For some software projects, the probability that the product may not return the value
anticipated can impact the cost planning of the project or lead to incremental estimates at milestones
when the investment in the project is reevaluated.
• Funding costs. Additional cost estimation factors may include total cost of ownership (TOC), payback
period, break-even point, and return on investment. For software projects, it may be possible to deliver one
or more subset version of the final product during the development life cycle. This can provide early payback
to the sponsoring organization. The impact of the time-value of money can be reflected in the business case.

7.2.1 Estimate Costs: Inputs

The inputs for estimating project costs in Section 7.2.1 of the PMBOK Guide are applicable inputs for software
®
projects, with the modification of Sections 7.2.1.3 through 7.2.1.6 and addition of Sections 7.2.1.8 and 7.2.1.9
(see below).

7.2.1.1 Cost Management Plan

See Section 7.2.1.1 in the PMBOK Guide.
®

7.2.1.2 Human Resource Plan

®
See Section 7.2.1.2 in the PMBOK Guide.
7.2.1.3 Scope Baseline

Theoretically, a fixed scope and stable requirements can result in an accurate initial cost estimate for a software
project. In reality, many successful software projects use feature driven delivery (FDD) where high-level scope and a

©2013 Project Management Institute. Software Extension to the PMBOK Guide Fifth Edition 125
®