11.3 ISO 9001 BCR Methodology

10.5 SW-CMM NPV Methodology

The NPV methodology for the Software Capability Maturity Model is a procedure to measure, quantify, and analyze money returned less inflation. The ratio of discounted benefits to costs for the Software Capability Maturity Model remains high due to reduced maintenance costs. The reduced maintenance costs are largely due to the institutionalization or use of peer reviews or the Software Inspection Process. It is possible to have a smaller NPV if rigorous peer reviews are not utilized, and large residual software defect populations remain . Larger software defect populations result in larger software maintenance costs. NPV is the discounted money earned from using the Software Capability Maturity Model 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 51 illustrates the NPV methodology for the Software Capability Maturity Model .

Figure 51: NPV Methodology for Software Capability Maturity Model

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

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

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