Precision Products, Inc.(PPI) has a software staff of 205 people supporting its product line of industrial electronic devices. It has been exploring the use of the software Capability Maturity Model to improve its software performance. An initial assessment has indicated that the company has just reached a nominal level (CMM level 2) on the COCOMO II rating scale for Process Maturity(PMAT). Some other characteristics of its average project are:
Size : 100 KSLOC
Scale exponent E : 1.10 (Including the effect of a Nominal PMAT rating)
Effort Adjustment factor EAF : 1.30
Cost per person-year : $150K
PPI is considering a process maturity investment effort to bring its CMM Level up to 3 and benefit from the project effort reduction estimation by COCOMO II via the reduction in the scale exponent E for its projects. The process maturity investment will require two years at an annual expenditure of :
A 5-person software Engineering Process Group (SEPG)
An extra week of training per person (roughly 2% of a person-year)
An additional $250K/year for assessments, trainers. etc.
Assuming that all PPI software projects and people have the average characteristics above, and assuming that all 200 of the project staff are always fully employed on projects, perform a simple business case analysis (excluding present value effects) for the process maturity investment, including:
A breakeven analysis of the number of years it will take to recover the 2-year investment. Assume conservatively that the project cost savings begin to be realized after level 3 is achieved at the end of the two years.
A 5-year Return on Investment (ROI) calculation of the net benefits (savings minus investments) per dollar invested in the initiative.ROI = (Savings – Investments)/Investment
If future costs and savings were discounted at a rate of i=0.95 per year, would the following increase or decrease:
Length of time to the breakeven point?
Size of the ROI?
As Precision product Inc. will from CMM level 2 to CMM level 3, goal of Precision product Inc. will change from basic project management to process standardization.
Goal of basic project management includes project monitoring and control, supplier agreement management, measurement and analysis, configuration management, process and product quality assurance.
Whereas process standardization includes more holistic goals of requirement development, technical solution, product integration, verification, validation, organizational process focus, organizational process definition, organizational training, integrated project management, risk management, decision analysis and resolution, integrated teaming, organizational environment for integration and integrated supplier management.
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