10.3 SW-CMM BCR Methodology

9.5 TSP ^SM NPV Methodology

The NPV methodology for the Team Software Process ^SM is a procedure to measure, quantify, and analyze money returned less inflation. The ratio of discounted benefits to costs for the Team Software Process ^SM remains high due to reduced maintenance costs. NPV is the discounted money earned from using the Team Software Process ^SM to create a new and improved software process. Its NPV methodology is a three-part process that consists of estimating discounted benefits, special costs, and the B/CR. Its benefit methodology consists of combining the discounted net benefits together with the special costs using the B/CR formula. Key elements include lowering the gross benefits to form the discounted benefits. These are used to form a realistic estimation of the magnitude of the benefits to the costs. (B/CR is a ratio of benefits to costs for objectively analyzing economic value. ROI% is used to avoid overstating the benefits. NPV is a skeptical and even cynical approach to ensure benefits are not overstated. All three of these methods should be used as exhibited by this NPV methodology. They are not mutually exclusive of one another.) Figure 44 illustrates the NPV methodology for the Team Software Process ^SM .

Figure 44: NPV Methodology for Team Software Process ^SM

Estimate NPV of benefits for TSP ^SM : The objective of this activity is to discount the gross benefits of TSP ^SM based on inflation. This substep includes: divide benefits by devaluation rate for TSP ^SM .

Estimate adjusted NPV benefits for TSP ^SM : The objective of this activity is to validate the benefits of TSP ^SM by removing its costs. This substep includes: subtract special costs from NPV benefits for TSP ^SM .

Estimate adjusted NPV B/CR for TSP ^SM : The objective of this activity is to measure the magnitude of the discounted net benefits to the costs for implementing TSP ^SM . This substep includes: divide adjusted NPV benefits by special costs for TSP ^SM .