Estimating the development cost of custom software

Cost estimation for cross-organizational ERP projects: research perspectives

“…Literature sources (Arnesen and Thompson 2005;Daneva and Wieringa 2006a;Daneva and Wieringa 2006b;Davenport 2000;Eschinger 2004;Holland et al 2005;O'Neil 2002;Rohde 2005;Stamelos et al 2003;Stensrud 2001;Stensrud and Myrtveit 2003;Vogelesang 2006) comparing ERP projects to other projects indicate that, unlike business information systems projects (e.g. data warehousing or workflow management systems) or custom software projects, ERP projects: (i) are broad in terms of functionality, covering thousands of business activities; (ii) treat the cross-organizational business processes in a value web as the fundamental building blocks of the system; (iiii) deliver a shared system which lets the business activities of one company become an integral part of the business of its partners; (vi) create system capabilities far beyond the sum of the ERP components' individual capabilities, which, allows the resulting system to qualitatively acquire new properties as result of its configuration; (v) may well include diverse configurations, each of which matches the needs of a unique stakeholder group, which, in turn, implies the presence of cost drivers unique to each configuration; (vi) deliver a system which is far from complete once the ERP project is over, because an ERP solution must mirror rapidly-changing business requirements, and so be adjusted regularly to accommodate current business needs; (Kelly and Holland 2002;Rolland and Prakash 2000)) are to be added in order to plan and manage the ERP project, and what the factors are that drive effort for these new activities.…”

“…The authors provide evidence that these characteristics make it almost impossible for ERP adopting organizations to determine a level of trust in any estimate. Examples of some specific barriers to trust, which researchers (Arnesen and Thompson 2005;Davenport 2000;O'Neil 2002;Seaver 2005;Stamelos et al 2003;Stensrud 2001;Stensrud and Myrtveit 2003) have found to be traceable to the above ERP project characteristics, include: lack of consensus on the objectives of the estimates, no known steps to ensure the integrity of the estimation process, no historical evidence at the ERP adopter's site supporting a reliable estimate, or the inability to clearly see whether or not estimates are consistent with consultants' demonstrated accomplishments on other projects in comparable organizations in the same business sector.…”

“…function points, future points, or lines of code). However, empirical studies indicate that in the ERP context the manufacturing paradigm is probably not the most adequate metaphor for portraying modern-specifically cross-organizational-ERP solutions, and that the results of this paradigm cannot ensure a specific form of the cost function (Stamelos et al 2003;Stensrud and Myrtveit 1998). This is partly because none of the existing estimation methods has been specifically devised for the ERP setting, and because very few studies have created and used ERP datasets for validation (Stensrud 2001).…”

“…Typically, the prediction of the effort to be expended in a project is the most soughtafter variable (Abran et al 2001;Boehm et al 2000a;Dolado 2001;Kitchenham and Mendes 2004;Molokken and Jorgensen 2003;Myrtveit et al 2005;Stamelos et al 2003;Stensrud 2001), that is, the size of the solution is related to the person-months employed to implement it. Therefore, the term ''cost'' is frequently used to represent the human effort required for solution implementation.…”

“…Our decision to use an FP-based measure is pragmatic and motivated by the following: (i) it is the first method (Abran et al 2001) to conform to ISO/ IEC14143-1, which specifies a set of generic mandatory requirements for a method to be referred to as a functional size measurement method; (ii) it is the only sizing approach applicable early in a project, e.g. in the RE process (Dekkers 2003; Garmus and Herron 2001;Horgan et al 1998); (iii) it has seen some use in ERP projects (Daneva 1999a, b;Morrison and Seaver 2007;O'Neil 2002); (iv) it has proven its worth in building cost estimation models (Jones 1997); and (v) a considerable number of projects measured in FP are becoming available, for example through the International Software Benchmarking Standards Group (ISBSG) (Stamelos et al 2003), providing options for performing statistical analysis on them. Furthermore, our decision to complement the FP counts with other requirements-based measures of size (e.g.…”