21.7 Boundaryless Virtual Teams | ROI of Software Process Improvement: Metrics for Project Managers and Software Engineers

19.5 Analysis of Net Present Value

The ROI of using the Software Inspection Process to produce 10,000 lines of code is 2,542% using NPV. This is obtained by dividing the benefits of $2,767,464 by the devaluation rate of 1.27628156. The special costs of $82,073 are subtracted, and the adjusted NPV benefits of $2,086,307 are divided by the special costs of $82,073. The result is multiplied by 100%.

The ROI of using the Personal Software Process ^SM to help produce 10,000 lines of code is 3,217% using NPV. This is obtained by dividing the benefits of $4,469,997 by the devaluation rate of 1.27628156. The special costs of $105,600 are subtracted. The adjusted NPV benefits of $3,396,760 are divided by the special costs of $105,600. The result is multiplied by 100%.

The ROI of using the Team Software Process ^SM to help produce 10,000 lines of code is 2,192% using NPV. This is obtained by dividing the benefits of $4,341,496 by the devaluation rate of 1.27628156. The special costs of $148,400 are subtracted. The adjusted NPV benefits of $3,253,276 are divided by the special costs of $148,400. The result is multiplied by 100%.

The ROI of using the Software Capability Maturity Model to help produce 10,000 lines of code is 661% using NPV. This is obtained by dividing the benefits of $3,023,064 by the devaluation rate of 1.27628156. The special costs of $311,433 are subtracted. The adjusted NPV benefits of $2,057,216 are divided by the special costs of $311,433. The result is multiplied by 100%.

The ROI of using ISO 9001 to help produce 10,000 lines of code is 158% using NPV. This is obtained by dividing the benefits of $569,841 by the devaluation rate of 1.27628156. The special costs of $173,000 are subtracted. The adjusted NPV benefits of $273,485 are divided by the special costs of $173,000. The result is multiplied by 100%.

The ROI of using Capability Maturity Model Integration to help produce 10,000 lines of code is 114% using NPV. This is obtained by dividing the benefits of $3,023,064 by the devaluation rate of 1.27628156. The special costs of $1,108,233 are subtracted. The adjusted NPV benefits of $1,260,416 are divided by the special costs of $1,108,233. The result is multiplied by 100%. Table 42 illustrates the analysis of NPV.

Table 42: Analysis of Net Present Value
SPI Method	NPV	Normalized
Inspection	2,542%	0.79
Personal Software Process ^SM	3,217%	1.00
Team Software Process ^SM	2,192%	0.68
Software Capability Maturity Model	661%	0.21
ISO 9001	158%	0.05
Capability Maturity Model Integration	114%	0.04

The SPI method with the highest NPV is the Personal Software Process ^SM at 3,217%. The SPI method with the lowest NPV is Capability Maturity Model Integration at 114%. All of the SPI methods have an NPV above 100%. The Personal Software Process ^SM , Software Inspection Process, and Team Software Process ^SM have an NPV of 3,217, 2,542, and 2,192%, respectively. On a normalized scale, the Personal Software Process ^SM has the highest NPV. ISO 9001 and Capability Maturity Model Integration have the lowest NPV on a normalized scale.