Conclusion

Software development takes place in an inherently uncertain environment, one that is constantly changing. In such an environment, continuous formulation and implementation of options enhances the capability to deal with the vast uncertainty through increased flexibility, exploitation of opportunities, and avoidance of pitfalls. By its very design, XP is well positioned to take advantage of this mind-set. The language of real options and the financial theory behind it demonstrate how the principles and practices of XP can guide a project toward value creation.