What is a Cost Estimator?

Cost estimation is a quantitative estimation of the cost of resources required for each project activity. It can be expressed in abbreviated or detailed form. All resource costs required for the project need to be estimated, including (but not limited to) labor, materials, and other content (such as considering inflation or cost margins). It is a process of continuous optimization, and the original cost estimate is revised accordingly as the project progress and relevant details continue to appear. ^[1]

Cost Estimate

1. Establish the working scope of the software in advance;

2. Make estimates based on software metrics (empirical metrics, metrics for similar engineering analogies)

3. Break down the project into small pieces that can be estimated separately

1. Analogy estimation method: also called top-down estimation method, which uses the actual cost of similar projects as the basis for project cost estimation.

2. Bottom-up estimation method: It is a method of estimating each work item or activity, and summing up the individual work items into the overall project estimation. It is also based on the activity cost method (ABC method).

3. Work distribution estimation method: use project stage percentage to estimate.

4. Parametric model method: It uses project characteristics (parameters) to estimate project components in a mathematical model.

5. Heuristic estimation: use historical data and statistical relationships to estimate

6. Staged Estimation: Estimating projects one by one (the most suitable estimation techniques for high-risk projects)

7. Computerized tools.

Industry standard "Software R & D Cost Measurement Specification" ^[2]

This standard specifies software R & D cost measurement methods, processes, and principles, including the composition of software R & D costs, the software R & D cost measurement process, and the application of software R & D cost measurement. This standard applies to measuring the cost of software R & D projects whose cost is closely related to functional scale. This standard does not involve software pricing, but relevant parties can clarify research and development costs based on this standard, thereby providing an important basis for software pricing.

Standard development background

For a long time, how to measure and evaluate the cost of software R & D projects has been a difficult problem in the industry. In China, there is no scientific and uniform software cost measurement standard system to guide, standardize and manage software project R & D costs. To a large extent, there is no basis for budgeting and great waste; in the process of tendering and evaluating software projects Due to the inability to define the reasonable cost range of software engineering projects, malicious low-price or ultra-high-price bidding often occurs; during the project implementation process, due to the lack of scientific basis for cost control, software developers often lag behind and cost far Beyond the original estimate.

Standard development process

Under the leadership of the Software Service Industry Department of the Ministry of Industry and Information Technology, the development of China's software cost measurement standard system has been started in 2010. China Software Industry Association System and Software Process Improvement Branch ^[3] (hereinafter referred to as the "Process Improvement Branch") and China Electronics Technology Standardization Institute (hereinafter referred to as "the Four Electronics Institutes") have established a foundation around the construction of a software R & D cost measurement standard system. Research work, sorted out the standard system. The core standard "Software R & D Cost Measurement Specification" was formally established in December 2010. The plan number is 2010-3194T-SJ, which was drafted by the Process Improvement Branch and the four electronics institutes. It organized about 40 units of production, learning, research and research. Participating together for 3 years, providing a "scientific basis" for software project budgeting, project approval, bidding, project planning, and change management.

Standard value

1. Advocate the use of a unified international function point method to measure software scale so that the measurement results can be compared;

2. Advocate the use of benchmark data to estimate software duration and cost, and make the estimation result more scientific;

3. Advocate the use of consistent estimation processes and formulas to make the estimation process transparent and the estimation results traceable.

Standard pilot application

The "Software R & D Cost Measurement Specification" has been applied on a trial basis since 2012. The General Administration of Customs, the People's Bank of China, Neusoft Group and other units have participated in the pilot work and applied it in scenarios such as budget approval, project approval, bidding, and project planning, and achieved good results. By the end of 2013, about 2,000 people had participated in CCEP training, and nearly 1,500 had passed the exam and became the first CCEP (software cost estimation experts) in China. After adopting the methods prescribed by the standard, the problems faced by the pilot enterprises for a long time have been greatly solved.

Standard release

The industry standard "Specifications for Software R & D Cost Measurement" (SJ / T11463-2013) ^[4] was officially issued by the Ministry of Industry and Information Technology of the People's Republic of China on October 17, 2013, and was officially implemented on December 1, 2013.

latest progress

It is recommended that this standard be led by the Zhongguancun Zhilian Software Service Industry Quality Innovation Alliance ^[2] , which is applying to upgrade to a national standard, and officially issued a plan number on July 31, 2015: 20151553-T-469 ^[5]

Standard Application Supporting Books

With the official release of the Ministry of Industry and Information Technology Industry Standard "Software R & D Cost Measurement Specifications", more and more software companies, government agencies, and software development and information construction departments in major industries (such as finance, telecommunications, energy, manufacturing, etc.) have begun This standard is used to guide the measurement of software development costs and is widely used in scenarios such as budgeting, bidding, project planning, change management, process improvement, and post-project evaluation. And whether to correctly understand the "Software R & D Cost Measurement Specifications" and understand the background and principles of the methods involved in the standard has become the key to whether the standard can be further applied in the industry. ^[6-7]

"Interpretation of Software R & D Cost Measurement Specifications" 2nd Edition ^[7] , "Guidelines for Implementation of Software Cost Measurement Standards" ^[8]

Beijing Local Standard "Code for Calculation of Software Development Expenses for Informationization Projects"

1. Standard development background Beijing, as the nation's software and information service capital, has always been at the forefront of the country and has maintained a rapid growth rate. The software and information service industry has also become more and more important in the city's economic development. status. With the gradual implementation of the Twelfth Five-Year Plan, investment in informatization construction in all walks of life in Beijing has also continued to increase, and the number of informatization projects that fall into the municipal financial appropriation category in the city alone can reach 700 to 800, with a total amount of up to More than three billion yuan, involving thousands of enterprises and institutions. However, this city has no scientific unified standard to support, standardize and manage the software development cost calculation of informatization projects, which has greatly restricted the healthy and sustainable development of Beijing's software industry. Due to the lack of relevant standards, how to calculate the reasonable cost of software development for informatization projects has always been a difficult point in the development of Beijing's software industry, which often leads to problems such as unfounded software project budget approval and malicious bidding.
2. The standardized value is under the guidance of the Beijing Municipal Economic and Information Commission. The first local standard for software cost measurement in Beijing, the Information Project Software Development Expenses, was jointly developed by the Beijing Software and Information Service Exchange and the Beijing Software Industry Association Process Improvement Branch. The "Measurement Specifications" was formally implemented in November this year, which indicates that the software development work of our city's informatization projects has a scientific and standard cost assessment method, which helps to standardize the industry market, promote software companies to increase production efficiency, and improve the quality of industrial growth .

Alliance Standard "Guidelines for Application (Budget Scenarios)"

1. Compilation background For a long time, how to measure software R & D costs has been a problem in the industry, especially in the activities of budgeting, bidding, and project planning. Because of the lack of scientific and unified software R & D cost metrics, it has led to project budgeting to a large extent. There is no basis to rely on, which results in wasted or insufficient budget. In the process of software project bidding, because of lack of software R & D cost measurement basis, malicious bidding and low-price bidding frequently occur. In the process of project implementation, the developer The scientific basis of cost control often lags behind and costs far exceed the original budget. Scientific and unified software R & D cost metrics are not only an important basis for effective software project management, but also an urgent need for the current development of the software industry.
To this end, the Software Service Industry Department of the Ministry of Industry and Information Technology entrusted the China Software Industry Association System and Software Process Improvement Branch to lead the organization to compile the "Software R & D Cost Measurement Specifications." The standard specifies the method and process of software R & D cost measurement, including the composition of software R & D cost, the software R & D cost measurement process, and the application of software R & D cost measurement. Its purpose is to help software development involve scientific and consistent cost measurement of all parties. However, the standard does not include the estimation model, industry benchmark data and detailed steps and methods for cost estimation in different scenarios in the software R & D cost measurement process. Therefore, a standard application guideline needs to be developed so that relevant parties can target different applications. Scenarios, proper use of industry data and models, and effective implementation of software R & D cost measurement related work.
2. Purpose and scope of preparation This guide is one of a series of application guides for "Software R & D Cost Measurement Specifications" and is aimed at budget scenarios.
The cost measurement in "Software R & D Cost Measurement Specifications" refers specifically to the process of estimating the estimated value of software development costs or measuring and analyzing the actual value. In "Software R & D Cost Measurement Specifications", budget refers to the process of determining the estimated project costs based on the results of project cost estimates. Therefore, this guide mainly describes how to carry out cost estimation in a budget scenario, and does not cover other aspects of budget preparation.
In the "Software R & D Cost Measurement Specifications" and this guide, the software development process includes requirements analysis, design, coding, integration, testing, acceptance and delivery activities, and related project management and support activities from the start of the project to the completion of the project acceptance. . Therefore, the software development costs in this guide only include all direct and indirect costs in the software development process, but do not include data migration, software maintenance, and other costs. The workload and duration involved in this guide are also only the workload and duration used in the software development process.
The main purpose of this guideline is to guide all parties involved in budgeting activities to effectively carry out cost estimation based on the Software R & D Cost Measurement Specifications and provide a scientific basis for determining software project budgets.
This guide clarifies the steps and methods of carrying out cost estimation related activities based on the Software R & D Cost Measurement Specification and benchmark data, and through examples, clarifies the estimation and adjustment methods for typical situations; for other special situations, relevant personnel should follow this guide And the relevant principles in the "Software R & D Cost Measurement Specifications", combined with the characteristics of the project, choose an appropriate estimation method or make reasonable adjustments to the estimation results. For other early estimation application scenarios similar to the budget, relevant personnel can also carry out project estimation activities by referring to the relevant principles and methods of this guide.

Beijing Local Standard "Code for Calculation of Software Operation and Maintenance Costs of Informationization Projects"

This standard specifies the methods and processes for measuring software operation and maintenance costs of informatization projects, including the content and cost components of software operation and maintenance services for informatization projects, and methods and processes for measuring the scale, workload, and costs of software operation and maintenance projects. ^[9]

The standard was formally approved in March 2016 with the approval of the Beijing Municipal Bureau of Quality Supervision, and was formulated by the Beijing Software Cost Technology Innovation Alliance and Beijing Kexin In-depth Technology Co., Ltd. ^[10]