19.4 Analysis of Return on Investment

17.2 Personal Software Process ^SM

The benefits of using the Personal Software Process ^SM to help produce 10,000 lines of code are $4,469,997. This was obtained by subtracting $40,000 in new total life cycle costs from $4,509,997 in old total life cycle costs.

The special, new, or additional costs that are required to introduce the Personal Software Process ^SM consist of only the training cost. The training cost to use the Personal Software Process ^SM to help produce 10,000 lines of code is $105,600.

The development cost of $40,000 was not included as a Personal Software Process ^SM cost. The development cost actually decreased. Had the development cost of the Personal Software Process ^SM increased, the difference or increase would have been included.

Let's determine the B/CR of the Personal Software Process ^SM to help produce 10,000 lines of code. Divide the benefits of $4,469,997 by the costs of $105,600 for the Personal Software Process ^SM . The B/CR of using the Personal Software Process ^SM to help produce 10,000 lines of code is 42:1.

Let's determine the adjusted benefits of the Personal Software Process ^SM to help produce 10,000 lines of code. Subtract $105,600 in Personal Software Process ^SM costs from $4,469,997 in gross Personal Software Process ^SM benefits. The result is $4,364,397 in adjusted benefits.

Let's determine the ROI of the Personal Software Process ^SM to help produce 10,000 lines of code. Divide the adjusted benefits of $4,364,397 by the costs of $105,600 for the Personal Software Process ^SM . Multiply the result by 100%. The ROI of using the Personal Software Process ^SM to help produce 10,000 lines of code is 4,133%. Table 27 illustrates the NPV of the Personal Software Process ^SM .

Table 27: NPV of Personal Software Process ^{S M}

SPI Method	Benefits/Costs
PSP SM Benefits (Gross)	$4,469,997
PSP SM Costs	$105,600
PSP SM B/CR	42:1
PSP SM Benefits (Adjusted)	$4,364,397
PSP SM ROI	4,133%
PSP SM Benefits (NPV)	$3,502,360
PSP SM B/CR (NPV)	33:1
PSP SM Benefits (Adjusted/NPV)	$3,396,760
PSP SM ROI (NPV)	3,217%

Now we are ready to determine the NPV of the gross benefits of the Personal Software Process ^SM to produce 10,000 lines of code. Divide the gross benefits of $4,469,997 by the devaluation rate of 1.27628156. The NPV of the gross benefits of using the Personal Software Process ^SM to help produce 10,000 lines of code is $3,502,360.

Now let's determine the B/CR of the Personal Software Process ^SM to produce 10,000 lines of code using NPV of the gross benefits. Divide the NPV of the gross benefits of $3,502,360 by the costs of $105,600 for the Personal Software Process ^SM . The B/CR of using the Personal Software Process ^SM to produce 10,000 lines of code is 33:1 using the NPV of the gross benefits.

Now let's determine the adjusted benefits of the Personal Software Process ^SM using the NPV of the gross benefits. Subtract $105,600 in Personal Software Process ^SM costs from $3,502,360, which is the NPV of the gross benefits. The result is $3,396,760 in adjusted benefits.

Finally, let's determine the ROI of the Personal Software Process ^SM to help produce 10,000 lines of code using the adjusted benefits. Divide the adjusted benefits of $3,396,760 by the costs of $105,600 for the Personal Software Process ^SM . Multiply the result by 100%. The ROI of using the Personal Software Process ^SM to help produce 10,000 lines of code is 3,217% using NPV.