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7 - PROJECT COST MANAGEMENT

7.2.2.11 Time-Boxed Estimating

Adaptive projects that are time-boxed with an evolving product scope should ensure that their cost estimates
are not just Level of Effort (LOE) aggregates. The current production rate and the resources that will be used
determine cost. For example, if a backlog of software features is required to be delivered in 12 months and
5 people are available, then the available effort is 60 person-months. Although this approach sometimes produces
an accurate estimate, care should be taken because it may provide unrealistic estimates unless the requirements
and features to be included are scaled to what can be done by those 5 people in 12 months.

7.2.2.12 Function Point and Source Lines of Code Estimating
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Historically, the estimated number of source lines of code or function points was used as the primary input
variable for effort estimation. Function point estimates are considered more accurate and more easily applied
from one project to another, since source lines of code vary significantly by programming language and by
programmer for the same function. More recent input measures include stories, story points, use cases, features,
and architectural objects. ISO/IEC 20926, Software and systems engineering—Software measurement—IFPUG
functional size measurement method 2009, provides guidance for software size estimation.

7.2.2.13 Story Point and Use Case Point Estimating

As mentioned in Section 7.2.2 of this Software Extension, story points and use case points are sometimes
used as inputs to cost estimation algorithms. Historical productivity data can be used to prepare an estimate; for
example, staff-days per historical story point can be multiplied by estimated story points to produce an estimated
number of staff-days.

7.2.2.14 Estimating Reusable Code Effort

Software project estimators consider whether software code will be developed or whether existing code will
be reused as is, adapted from a previous project, acquired from open sources, or some combination thereof. The
amount of effort required to reuse code without modification may be small. Integration testing to check that the
reused code was integrated correctly may be all that is required. Additional effort may be required to modify the
existing code base to accommodate the reused code. Adapted code requires some amount of redesign, recoding,
and testing as newly developed code. The amount of effort required depends on the amount of modification required.
It is possible that the adapted code may have the correct design but requires conversion because the new software
is in a different programming language, or the adapted code may require some amount of redesign to change or
add capabilities. Some estimation models include parameters to account for the estimated effort of reuse.

7.2.2.15 Price-to-Win

Estimating the cost of performing a software project is the basis for estimating the price, that is, what the
customer will pay. Especially in competitive acquisitions, price is computed as cost plus profit or fee. The ideal

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