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I. INTRODUCTION
Software cost estimation provides the vital link between the general concepts and techniques of
economic analysis and the particular world of software engineering. Project Cost Estimation is the task of
predicting the cost, effort or productivity required to complete the project. Ali Arifoglu (Arifoglu, 1993)
described it as an empirical process and also included development time as one of the requirements to complete
the project. One of the most important issues confronting any software project is how to accurately predict the
cost of developing the software. Software cost estimation is important for making good management decisions
(Simms, 2011). There is no good way to perform a software cost-benefit analysis (Clements, 2011), break-even
analysis, or make-or-buy analysis without some reasonably accurate method of estimating software costs, and
their sensitivity to various product, project, and environmental factors (Somerville, 2010). Cost management is
perhaps one of the most difficult aspects of project management. Project managers are well practiced at
acquiring resources, assigning work, tracking progress and completing projects (Vaughan, 2011). But since
there's a cost associated with nearly everything their job becomes much more complex and difficult. They need
to be sure the cost of the project is estimated accurately at the beginning, budgets are assigned for various parts
of the project there are the tools to control costs throughout the lifecycle of the project (Simms, 2011). The
software cost estimation considers the size of the project which was traditionally determined by delivered source
lines of code.
This was acceptable when programmers are rated by the number of source lines code written.
Technology has eased the development process, incorporating code generators and other case tools to fasten
programming. Other cost estimation metrics in use are Function-related (function points) metrics based on an
estimate of the functionality of the delivered software, Application (Object) points that can be used with
languages such as database programming languages or scripting languages (Albrecht & Gaffney, 1983), and Use
Case Point created to estimate the software size of systems that were object oriented in nature (Ashman, 2004).
Somerville (Somerville, 2010) identified eight cost estimation techniques that use these metrics. These are
Algorithmic cost modelling where most researchers have been basing their arguments due to its mathematical
application; others are Expert Judgement, Pricing to win, Estimation by Analogy, Parkinson’s Law, Macro,
Bottom-up, and Parametric techniques (Somerville, 2010). It was suggested in Travailo et al (Trivailo, Sippel,
& Sekercioglu, 2012) that combining these techniques produces better result. The key cost estimation methods
used in software projects are concisely enumerated with the metrics in the following sections and their
respective attributes, problems, and possible solutions provided. Barton (Barton, 2011) believes that the interests
of the organization are best served when it develops its own estimation model. The models that will be presented
provide the organization with an initial starting point, but organization-specific factors must be determined.The
remainder of this paper is organized as follows: section 2 provides a brief literature review and places this paper
in the context of existing research. Section 3 describes and justifies the software cost estimation metrics; section
4 looks at different types of software cost estimation techniques. Discussion and conclusion are then presented
in section 5.
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calculating the technical complexity factors, (TCF). Function point of a system can be calculated using this
formula: FP = UFP * (0.65 + 0.01 * TCF). From a customer view point, Function Points can be used to help
specify to a vendor, the key deliverables (Vaughan, 2011), to ensure appropriate levels of functionality will be
delivered, and to develop objective measures of cost-effectiveness and quality (Stensrud, 1998). They are most
effectively used with fixed price contracts as a means of specifying exactly what will be delivered. From a
vendor perspective, successful management of fixed price contracts depends absolutely on accurate
representations of effort According to Touesnard (Touesnard, 2004), FP relies on counting functions which may
differ from individual to individual depending on the person’s ability. Counting FP is manual and time
consuming. Organisations can overcome these problems by practicing function points analysis consistently over
a period of time
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is difficult for someone to reproduce and use the knowledge and experience of an expert. If expert judgement is
applied wrongly, inaccurate estimation may occur resulting to cost overrun or underrun.
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We finally recommend cost estimators to use different cost estimating techniques, compare the results
and determine the reasons for any large variations. It is also advisable to document all assumptions made during
cost estimation and maintain historical database.
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