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7 - PROJECT COST MANAGEMENT

7.2.2.7 Cost of Quality (COQ)

Estimating the cost of quality can be used as a technique to improve software cost estimation because cost
of quality can exert a significant impact on the cost of a software project. For example, requirements for high
quality (e.g., safety-critical or mission-critical software) can multiply the effort and, therefore, the cost of software
development. Initially identifying quality-critical features and functions can reduce overall cost, as opposed to
attempting to test quality into the software at the end of the project. Failure Modes and Effects and Criticality Analysis
(FMECA) and the processes in RTCA DO-178B/C for safety-critical avionics software are systems engineering tools
that support identification of quality-critical cost factors. Also, results chains and business process analyses can
identify high-cost, but possibly low-value, quality requirements. These quality requirements can be expensive to
implement and, in some cases, are undetectable by the user in the operating environment.

At the same time, failing to estimate and include the cost of resources needed to meet legitimate requirements
for performance, safety, security, and other nonfunctional requirements can inhibit market or customer acceptance
and cause huge additional costs in rework at the end of a project when the rework is most expensive.
Cost of quality also includes the cost to fix functional or technical defects found during a project. These costs
include effort associated with reestablishing the development or testing environment to verify fixes after the fact,
updating project artifacts related to the defective code, and the cost of interrupting the flow of value-added work.
These costs of rework can be considerable and are very difficult to anticipate at the beginning of a project.

For adaptive life cycle software projects with stable teams and a history of delivery, historical velocity (analogy
estimating) will include much of the cost of quality for software developed in similar projects because the dynamics
of individual performance, team skills, motivation, and other factors are included in historical velocity. For other
projects, expert judgment, estimating models, and reserve analysis from prior projects can be used to establish a
management reserve to handle the uncertainty associated with the cost of quality.

A key to reducing these costs in adaptive life cycle projects is gathering feedback early in the process. See
Section 8 of the PMBOK Guide and this Software Extension for more information on the cost of quality for software
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projects.

7.2.2.8 Project Management Software

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See Section 7.2.2.8 of the PMBOK Guide.

7.2.2.9 Vendor Bid Analysis

See Section 7.2.2.9 of the PMBOK Guide.
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7.2.2.10 Group Decision-Making Techniques

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See Section 7.2.2.10 of the PMBOK Guide.

130 ©2013 Project Management Institute. Software Extension to the PMBOK Guide Fifth Edition
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