Software Cost Estimation and Sizing Methods

Estimating the size and cost of software is a risky business. When software is a crucial component in numerous space, weapon, aircraft, and information technology projects critical to operations, as it often is for the Air Force, accurate estimates of software costs are essential. Because software size is usually the most influential factor in determining software costs, good estimates of size are critical to good cost estimation. Rather than seeking the perfect method for estimating size and cost exactly, a more realistic approach to improving estimation is to reduce the risks (that is, to anticipate likely problems) associated with improper sizing and costing of software. Consequently, the goal of this report is to aid experienced cost analysts in understanding the sources of uncertainty and risk in sizing and costing software, and to provide insight into mitigating the risks when making choices about different sizing and costing options. We pay particular attention to the early stages of a project, when many of the factors needed to support estimation (such as the particulars of each system requirement) may be unknown or uncertain. The notion of risk is central to any such analysis, and two techniques can improve accountability of risks relating to software estimates: identifying areas of uncertainty (that may lead to risky situations) and analyzing the estimation process to determine where risk mitigation can reduce the uncertainty. The first technique increases an analyst's diligence in reporting uncertainty. The second technique involves actually addressing and mitigating risks in the estimation process, thereby reducing the total uncertainty and increasing the estimate's accuracy. The two techniques are complementary. The first improves accountability by reporting the uncertainty. The second improves accountability by dealing with and reducing the uncertainty.