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7 - PROJECT COST MANAGEMENT

set of candidate features, use cases, or epics (overarching user stories) are defined early in the project and evolved,
as uncertainties are resolved. Using an adaptive approach for a software project intentionally limits upfront planning to
high-level scope, which in itself may not be a sufficient basis for an accurate initial cost estimate. For adaptive software
projects, constraints on total time and overall cost may be specified initially, with the possibility of later revision.

7.2.1.4 Project Schedule

As described in Section 6 of this Software Extension, predictive software projects tend to develop detailed
schedules that include major milestones and other review and evaluation times. Adaptive software projects are
based on minimal initial plans, including the details of the project schedule; details of the schedule versus priorities
of features to be implemented are elaborated as the project evolves. Statistical methods may be used to account
for schedule uncertainty for both predictive and adaptive software projects.

7.2.1.5 Risk Register

As described in Section 11 of this Software Extension, all software projects (predictive or adaptive) can benefit
from initial and ongoing risk management. A risk register can be used as an input to cost estimation by documenting
identified risk factors and the mitigation strategies to be pursued. Confidence in a cost estimate is dependent on the
probability of and the potential impact of identified risk factors, such as the availability of functional specialists and
subject matter experts when they will be needed. Opportunity management is also pursued to identify opportunities
for cost savings and additional cost-benefit returns. Risk analysis is particularly important in estimating the cost
and price to bid for a competitively sourced software project.

There is a large number of variables that can impact an estimate; assumptions about the variables need to be
documented and tracked in the risk register.

7.2.1.6 Enterprise Environmental Factors

The level and maturity of architecture for an enterprise-wide software product have a significant impact on
the effort and schedule for software development. Conformance to existing enterprise architecture often lowers
the amount of effort and time required for software development, while it imposes constraints on the solution,
particularly in the use of COTS or other non-developmental software items. Once architectural decisions are made,
some development tasks can be performed concurrently, thus allowing shorter schedules at higher completion rates.

7.2.1.7 Organizational Process Assets

See Section 7.2.1.7 in the PMBOK Guide.
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7.2.1.8 Software Size and Complexity

Software size and complexity are two of the most important factors that affect software cost, so they are
primary inputs to most software cost and schedule estimation models. Deriving appropriate estimates of size and

126 ©2013 Project Management Institute. Software Extension to the PMBOK Guide Fifth Edition
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