Chapter 20: Optimizing Return on Investment

17.5 ISO 9001

The benefits of using ISO 9001 to help produce 10,000 lines of code are $569,841. This was obtained by subtracting $3,940,156 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 use ISO 9001 consist of process, product, preparation, and audit costs. The specials costs that are necessary to produce 10,000 lines of code are $54,600, $56,000, $26,400, and $36,000, respectively. This totals $173,000 to introduce ISO 9001 as a SPI method.

The development cost of $442,656, testing cost of $667,000, and maintenance cost of $2,830,500 were not included as ISO 9001 costs. The development, testing, and maintenance costs either stayed the same or decreased. Had the development, testing, or maintenance costs increased, the differences or the increases would have been included.

Let's determine the B/CR of ISO 9001 to help produce 10,000 lines of code. Divide the benefits of $569,841 by the costs of $173,000 for ISO 9001. The B/CR of using ISO 9001 to help produce 10,000 lines of code is 3:1.

Let's determine the adjusted benefits of ISO 9001 to help produce 10,000 lines of code. Subtract $173,000 in ISO 9001 costs from $569,841 in gross ISO 9001 benefits. The result is $396,841 in adjusted benefits.

Let's determine the ROI of ISO 9001 to help produce 10,000 lines of code. Divide the adjusted benefits of $396,841 by the costs of $173,000 for ISO 9001. Multiply the result by 100%. The ROI of using ISO 9001 to help produce 10,000 lines of code is 229%. Table 30 illustrates the NPV of ISO 9001.

Table 30: NPV of ISO 9001

SPI Method	Benefits/Costs
ISO 9001 Benefits (Gross)	$569,841
ISO 9001 Costs	$173,000
ISO 9001 B/CR	3:1
ISO 9001 Benefits (Adjusted)	$396,841
ISO 9001 ROI	229%
ISO 9001 Benefits (NPV)	$446,485
ISO 9001 B/CR (NPV)	3:1
ISO 9001 Benefits (Adjusted/NPV)	$273,485
ISO 9001 ROI (NPV)	158%

Now we are ready to determine the NPV of the gross benefits of using ISO 9001 to help produce 10,000 lines of code. Divide the gross benefits of $569,841 by the devaluation rate of 1.27628156. The NPV of the gross benefits of using ISO 9001 to help produce 10,000 lines of code is $446,485.

Now let's determine the B/CR of ISO 9001 to help produce 10,000 lines of code using the NPV of the gross benefits. Divide the NPV of the gross benefits of $446,485 by the costs of $173,000 for ISO 9001. The B/CR of using ISO 9001 to help produce 10,000 lines of code is 3:1 using the NPV of the gross benefits.

Now let's determine the adjusted benefits of ISO 9001 to produce 10,000 lines of code using the NPV of the gross benefits. Subtract $173,000 in ISO 9001 costs from $446,485, which is the NPV of the gross benefits. The result is $273,485 in adjusted benefits.

Finally, let's determine the ROI of ISO 9001 to help produce 10,000 lines of code using the adjusted benefits. Divide the adjusted benefits of $273,485 by the costs of $173,000 for ISO 9001. Multiply the result by 100%. The ROI of using ISO 9001 to help produce 10,000 lines of code is 158% using NPV. (This indicates that for every dollar spent, 58 cents is returned.)