8.3 PSPSM BCR Methodology


7.5 Inspection NPV Methodology

The NPV methodology for the Software Inspection Process is a procedure to measure, quantify, and analyze money returned less inflation. The ratio of discounted benefits to costs for the Software Inspection Process remains high due to reduced maintenance costs. NPV is the discounted money earned from using the Software Inspection Process 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 benefit to cost ratio. 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 30 illustrates the NPV methodology for the Software Inspection Process.

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Figure 30: Net Present Value Methodology for Software Inspection Process

Estimate NPV of benefits for inspection: The objective of this activity is to discount the gross benefits of the Software Inspection Process based on inflation. This substep includes: divide benefits by devaluation rate for inspection.

Estimate adjusted NPV benefits for inspection: The objective of this activity is to validate the benefits of the Software Inspection Process by removing its costs. This substep includes: subtract special costs from NPV benefits for inspection.

Estimate adjusted NPV benefit to cost ratio for inspection: The objective of this activity is to measure the magnitude of the discounted net benefits to the costs for implementing the Software Inspection Process. This substep includes: divide adjusted NPV benefits by special costs for inspection.




ROI of Software Process Improvement. Metrics for Project Managers and Software Engineers
ROI of Software Process Improvement: Metrics for Project Managers and Software Engineers
ISBN: 193215924X
EAN: 2147483647
Year: 2004
Pages: 145

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