19.5 Analysis of Net Present Value


17.3 Team Software Process SM

The benefits of using the Team Software Process SM to help produce 10,000 lines of code are $4,341,496. This was obtained by subtracting $168,501 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 Team Software Process SM consist of only the training cost. The training cost to use the Team Software Process SM to help produce 10,000 lines of code is $148,400.

The development cost of $168,501 was not included as a Team Software Process SM cost. The development cost actually decreased. Had the development cost of using the Team Software Process SM increased, the difference or increase would have been included.

Let's determine the B/CR of the Team Software Process SM to help produce 10,000 lines of code. Divide the benefits of $4,341,496 by the costs of $148,400 for the Team Software Process SM . The B/CR of using the Team Software Process SM to help produce 10,000 lines of code is 29:1.

Let's determine the adjusted benefits of the Team Software Process SM to help produce 10,000 lines of code. Subtract $148,400 in Team Software Process SM costs from $4,341,496 in gross Team Software Process SM benefits. The result is $4,193,096 in adjusted benefits.

Let's determine the ROI of the Team Software Process SM to help produce 10,000 lines of code. Divide the adjusted benefits of $4,193,096 by the costs of $148,400 for the Team Software Process SM . Multiply the result by 100%. The ROI of using the Team Software Process SM to help produce 10,000 lines of code is 2,826%. Table 28 illustrates the NPV of the Team Software Process SM .

Table 28: NPV of Team Software Process S M

SPI Method

Benefits/Costs

TSP SM Benefits (Gross)

$4,341,496

TSP SM Costs

$148,400

TSP SM B/CR

29:1

TSP SM Benefits (Adjusted)

$4,193,096

TSP SM ROI

2,826%

TSP SM Benefits (NPV)

$3,401,676

TSP SM B/CR (NPV)

23:1

TSP SM Benefits (Adjusted/NPV)

$3,253,276

TSP SM ROI (NPV)

2,192%

Now we are ready to determine the NPV of the gross benefits of the Team Software Process SM to produce 10,000 lines of code. Divide the gross benefits of $4,341,496 by the devaluation rate of 1.27628156. The NPV of the gross benefits of using the Team Software Process SM to help produce 10,000 lines of code is $3,401,676.

Now let's determine the B/CR of the Team Software Process SM using the NPV of the gross benefits. Divide the NPV of the gross benefits of $3,401,676 by the costs of $148,400 for the Team Software Process SM . The B/CR of the Team Software Process SM is 23:1 using the NPV of the gross benefits.

Now let's determine the adjusted benefits of the Team Software Process SM using the NPV of the gross benefits. Subtract $148,400 in Team Software Process SM costs from $3,401,676, which is the NPV of the gross benefits. The result is $3,253,276 in adjusted benefits.

Finally, let's determine the ROI of the Team Software Process SM to help produce 10,000 lines of code using the adjusted benefits. Divide the adjusted benefits of $3,253,276 by the costs of $148,400 for the Team Software Process SM . Multiply the result by 100%. The ROI of using the Team Software Process SM to help produce 10,000 lines of code is 2,192% using NPV.

Since the Team Software Process SM is designed for software project teams of up to 150 people, its benefits may be substantially lower.




ROI of Software Process Improvement. Metrics for Project Managers and Software Engineers
ROI of Software Process Improvement: Metrics for Project Managers and Software Engineers
ISBN: 193215924X
EAN: 2147483647
Year: 2004
Pages: 145

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