Why Software (Size) Matters in Capital Projects The need to identify the risks of software. Ton Dekkers Galorath International Ltd

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1 Why Software (Size) Matters in Capital Projects The need to identify the risks of software Ton Dekkers Galorath International Ltd UKSMA, London, 8 November 2012

2 Ton Dekkers - Roles Galorath International Ltd Director of Consulting Netherlands based Netherlands Software Metrics Association (NESMA) President International Software Benchmarking Standards Group (ISBSG) Past President Common Software Measurement Int. Consortium (COSMIC) COSMIC Functional Size Measurement Method International Advisory Committee Dutch Association of Cost Engineers (DACE) WG Parametric Estimation Contact: tdekkers@galorath.com 2012 Copyright Galorath Incorporated 2

About Galorath Galorath s SEER products are used to parametrically estimate effort, duration, cost, and to gauge risk A software publisher / research firm with four products: Over 30 years in

3 About Galorath Galorath s SEER products are used to parametrically estimate effort, duration, cost, and to gauge risk A software publisher / research firm with four products: Over 30 years in business Hundreds of customers, many Fortune 500 Headquartered in El Segundo, CA (U.S.) office in Andover (U.K.) Staff nationwide in the U.S. and in Europe Professional Services provides consulting and training Copyright Galorath Incorporated 3

4 How to prevent delay in the tunnel 2012 Copyright Galorath Incorporated 4

5 Some incidents? Leidsche Rijn Tunnel Risks! Schedule According briefing Rijkswaterstaat at the residents meeting, the main reason for delay was that the software was not yet available. Tweede Kamer wants explanation about A73 Each defect in the software causes the safety system to shut down the tunnels immediately. The tunnels in the A73 are the first to comply with the new regulations. Other tunnels in the Netherlands will follow in the next years. Quality 2012 Copyright Galorath Incorporated 5

6 Parametric Estimate Challenge ISPA / DACE Team Ton Dekkers, Sven Hukriede, Rob Huisman, Hette van der Zwaag Case: Bridge versus tunnel Parametric Estimate based on historical data Basis of Estimate Estimates: Construction costs bridge Construction costs tunnel Traffic Control Safety Systems 2012 Copyright Galorath Incorporated 6

7 E S T I M A T I O N 2012 Copyright Galorath Incorporated 7

8 Cost Estimating The process of collecting and analysing historical data and applying quantitative models, techniques, tools, and databases to predict the future cost of an item, product, program, or task Purpose of cost estimating: Translate system/functional requirements associated with programs, projects, proposals, or processes into budget requirements Determine and communicate a realistic view of the likely cost (effort, schedule) outcome, which can form the basis of the plan for executing the work 2012 Copyright Galorath Incorporated 8

9 System Description If you can t tell me what it is, I can t tell you what it costs. -Mike Jeffers Source: ISPA-SCEA training 2012 Copyright Galorath Incorporated 9

10 System Description If you can t tell me what it is, I can t tell you what it costs. -Mike Jeffers Source: ISPA-SCEA training 2012 Copyright Galorath Incorporated 10

11 A Bridge to the Future Historical data Source: ISPA-SCEA training Time now Estimate 2012 Copyright Galorath Incorporated 11

12 Estimation Techniques Most Common Extrapolation from Actuals Expert Opinion The three essential cost estimating techniques (or methodologies) are: Analogy Parametric Build-Up 2012 Copyright Galorath Incorporated 12

Parametric Estimating - Process Collect Data Relevant, Reliable Normalise Data Cost level, activity level Determine correlations Validate correlations R 2 > 0.

13 Parametric Estimating - Process Collect Data Relevant, Reliable Normalise Data Cost level, activity level Determine correlations Validate correlations R 2 > 0.8 is useable Adjust Data Set when necessary Define CER/EER* Estimate the new object ISPA & SCEA are merged into ICEAA * Cost Estimation Relationship / Effort Estimation Relationship 2012 Copyright Galorath Incorporated 13

14 Something completely different? Estimation: Determine how much effort (time) is needed to get from a starting point to a specified target under conditions agreed upon Example: How much time is required to get by car from home to the premises. You need to arrive at 9:30 a.m Copyright Galorath Incorporated 14

15 Expert? km/miles risk analysis average speed base time traffic weather type road correction delay speed up expected time 2012 Copyright Galorath Incorporated 15

16 Simplified Estimation Model size risk analysis productivity risks gross hours influences measures consequences hours (& money) 2012 Copyright Galorath Incorporated 16

17 Size Basis of Estimate Quantity Metrics: excavation and backfill quantities, concrete volumes, piping quantities,... These may be organised by facilities, process train or manufacturing unit. Basis of Estimate Software Services (Draft) Requirements: number of use cases, number of backlog items,... Functional size: Function points Measurement methods: IFPUG, NESMA, COSMIC, FiSMA, Technical size: (source) lines of code, number of interfaces, modules, Service size: number of incidents, tickets, users, locations, These may include expected error range, level of accuracy and method of measuring (e.g. Backfired, detailed) 2012 Copyright Galorath Incorporated 17

18 Parametric Estimating - Method A mathematical relationship between a parameter and cost Parameter may be physical, performance, operational, programmatic, or cost Uses multiple systems to develop relationship Allows statistical inferences to be made AKA Cost Estimating Relationships (CERs), Cost Effort Relationships (EER s), Rates, Factors, Ratios 200 This pattern holds Copyright Galorath Incorporated 18

19 Parametric Estimating Example I Estimate construction cost for a bridge and a tunnel with given specifications Purpose make a early decision on bridge or tunnel Traffic control and safety system to be estimated separately Basis of Estimate scope, estimation process, assumptions and inputs, exclusions AACE: Best Practice 34R Copyright Galorath Incorporated 19

20 Parametric Estimating Example II Data Collection Data Normalisation Cost price to 2011 Level 2012 Copyright Galorath Incorporated 20

21 Parametric Estimating Example III Determine correlation Validate correlation m1: R m2: R Estimate the new object 2012 Copyright Galorath Incorporated 21

22 Parametric Estimating Extended Single correlation (2 parameters) PE Example y = x Multiple correlation (multiple interdependent parameters) 2012 Copyright Galorath Incorporated 22

Traffic Control Safety Systems I Base Components: Traffic Control Signal Processing Data Link Integrity Control Processing Influenced by safety systems

23 Traffic Control Safety Systems I Base Components: Traffic Control Signal Processing Data Link Integrity Control Processing Influenced by safety systems Bridge Fixed: Wind Fog Accident Bridge Open: Wind Fog Accident Status (open/closed) Tunnel: Fire Air Accident Congestion 2012 Copyright Galorath Incorporated 23

Traffic Control Safety Systems II Used analogy based sizing (existing systems) ISO Standard: Function Points Size unit in used EER s (effort Estimation Relation) Uncertainty component size:

24 Traffic Control Safety Systems II Used analogy based sizing (existing systems) ISO Standard: Function Points Size unit in used EER s (effort Estimation Relation) Uncertainty component size: least likely most (PERT) Used parametric Model in SEER SEM Monte Carlo Simulation for probability analysis Benchmarked with historical data ISBSG Copyright Galorath Incorporated 24

25 Traffic Control Safety Systems III 2012 Copyright Galorath Incorporated 25

26 Traffic Control Safety Systems IV Traffic Control Safety Systems Bridge Fixed Bridge Open 50% 80% 8.4 M 11.9 M 10.1 M 14.6 M Tunnel 12.6 M 17.2 M Base pricing (2011): Monthly Rate: 11,000 Euro referring to effort months 2012 Copyright Galorath Incorporated 26

27 Bring it together 2012 Copyright Galorath Incorporated 27

28 A systematic approach 2012 Copyright Galorath Incorporated 28

29 Integrated development 2012 Copyright Galorath Incorporated 29

30 Software Services Integrated ICT / SW Product in the PBS ICT / SW Product in the BOM ICT / SW Product in the planning 2012 Copyright Galorath Incorporated 30

31 TLC Budgetting The cost of the ICT / software system must be taken into account The costs depends on: The requirements for the system The quality of the system requirements The maturity of the development process CAPEX Development costs of the ICT / software OPEX Maintenance costs for the ICT / software 2012 Copyright Galorath Incorporated 31

32 Is cost the only relevant factor? Costs Tunnel Hardware 95.5 M 88% Software 12.6 M 12% Total 108.1M Critical Path Duration Defects 2012 Copyright Galorath Incorporated 32

33 Effort Duration and Effort Both Quick and Cheap are possible, but not at the same time Minimum Time Realistic Optimal Effort Time pressure will in crease costs Define the required timelines Date of delivery is a strategic decision Duration 2012 Copyright Galorath Incorporated 33

Detect defects early The later detected, the more cost for repair Better quality means higher costs What

34 Quality Software is never error free the number of defects behaves according a pattern Include the defect pattern in project tracking When all functionality is developed, it doesn t indicate software is ready Detect defects early The later detected, the more cost for repair Better quality means higher costs What number of defects is allowed? Is software security / safety related? 2012 Copyright Galorath Incorporated 34

35 OPEX: need for maintenance Maintenance costs can be up to 100% of the development costs Maintenance consist of Solving bugs Enhancements / changes (e.g. changed regulations; new functionality) Hardware replacement Restructuring (e.g. after a large amount of changes) Maintenance costs can be substantial and must be taken into account 2012 Copyright Galorath Incorporated 35

36 Acknowledgement DACE Challenge team Ton Dekkers Sven Hukriede Rob Huisman Hette van der Zwaag DACE NESMA team Ton Dekkers Eric van der Vliet Frank Vogelezang 2012 Copyright Galorath Incorporated 36

37 2012 Copyright Galorath Incorporated 37

Estimation The next level. Ton Dekkers Galorath International Ltd

Estimation The next level. Ton Dekkers Galorath International Ltd Estimation The next level Ton Dekkers Galorath International Ltd ISMA 8 Confidence Rio de Janeiro (BR), 2 October 2013 Ton Dekkers - Roles Galorath International Ltd Director of Consulting Netherlands