Chapter 15: BenefitCost Ratio

13.5 ISO 9001

Let's begin by modeling the costs for developing the policies and procedures for ISO 9001. ISO 9001 requires 144 policy statements, 144 quality manual paragraphs, and 51 procedures at 1.61 hours each. That comes to 546 hours for 339 ISO 9001 policy statements, quality manual paragraphs, and procedures. Multiply 546 by $100, and the cost of developing ISO 9001 policies and procedures is $54,600.

Now let's examine the cost of putting ISO 9001 into practice for a single software project. ISO 9001 requires 51 plans and 144 records at about 2.87 hours each. That comes to 560 hours for 195 ISO 9001 plans and records for a single software project. Multiply 560 by $100, and the cost of ISO 9001 plans and records is $56,000 for a single software project.

Let's estimate one software project with four people in 23 indoctrination courses at 1 hour each, which totals 92 hours. Let's similarly estimate one project with four people in 23 response-conditioning courses at 1 hour each, which also totals 92 hours. Finally, let's estimate one software project with four people in one 20 hour mock quality system audit, for a total of 80 hours. Now let's add 92 indoctrination hours, 92 response-conditioning hours, and 80 mock quality system audit hours. That totals 264 quality system audit preparation hours. Finally, let's multiply 264 by $100 for a total of $26,400 in quality system audit preparation costs.

Let's not forget the quality system audit itself. An ISO 9001 quality system audit may cost around $48,000. However, let's isolate this cost to $12,000 per software project. Typically, internal labor associated with quality system audits is about twice the cost of the audit itself. Therefore, let's assume $24,000 in internal costs to support the actual quality system audit. Adding $12,000 in external costs and $24,000 in internal costs, we arrive at $36,000 per quality system audit per project.

Let's also assume our software effort is 5,088 hours to analyze, design, and code 10,000 lines of code. Multiply 5,088 by $100 per hour, and our software cost is now $508,800 to analyze, design, and code 10,000 lines of code. However, software productivity can increase by about 13% with ISO 9001, so let's adjust our software cost to $442,656.

Now let's estimate the cost of software testing. Let's assume that we started with 1,000 software defects. Let's further assume that our software testing process nabs two- thirds of our 1,000 defects or 667 software defects. Let's also assume it takes 10 hours to find each of the 667 software defects. That comes to 6,670 software testing hours and at a rate of $100 per hour is $667,000 for software testing.

But we are not done yet. Now let's use our total life cycle cost model. The formula is software size multiplied by 10.442656, less the test hours times nine. (0.442656 is 87% of 0.5088, which is due to a 13% productivity increase associated with using ISO 9001.) Our total life cycle cost for using ISO 9001 is 44,396.56 hours. Let's subtract the 4,427 hours of software effort and 6,670 hours of software testing effort. That leaves us with 33,300 hours in residual software maintenance costs. However, there is also a 15% increase in software quality due to using ISO 9001. This lowers our software maintenance hours to 28,305 and at a rate of $100 per hour is $2,830,500. Table 6 illustrates the costs of ISO 9001.

Table 6: Estimated Cost of Software ISO 9001

Factor	Cost
Processes	$54,600
Products	$56,000
Preparation	$26,400
Audit	$36,000
Development	$442,656
Test	$667,000
Maintenance	$2,830,500
Total	$4,113,156

Now we are ready to estimate the complete costs of using the ISO 9001 to help produce 10,000 lines of code. Add $54,600 for processes, $56,000 for products, $26,400 for preparation, $36,000 for audit, and $442,656 for development. Also add $667,000 for software testing and $2,830,500 for software maintenance. The complete cost to use the ISO 9001 to help produce 10,000 lines of code is $4,113,156.