408 1st semester 2005-2006

HW 4

26.1)
A company might charge a higher price under the follow ing circums tances ,
a. Cos t es tima te uncertain ty: If an organization is uns ure of its cos t
es timat e, it may increas e its price by s ome contingency above its
normal profit.
b. Requiremen ts volatility : If the requirements are likely to change, an
organizat ion may low er its price to w in a contract. A fter the contract
is aw arded, high prices may be charged for changes to the
requiremen ts .
c. Monopoly: If the organizat ion is the only one w ho produces this kind
of s oftw are and no other company is competing w ith it, it can charge
high prices for the softw are.

26.4)
To reduce cos t es timation techniques ris ks ,
a. F or large projects you should us e s everal cos t es timation and
compare their res ults . If thes e res ults are different, you s hould look
for more info about the product, proces s or development team and
repeat cos ting until the es tima tes converge.
b. U s ing a detailed requirements document or a sys tem prototype to
es timat e the sys tem functionali ty and then to es timate its cos t.
c. U s ing info from previous ly completed s imilar projects to es timat e the
new project’s cos t.
d. S everal experts on the propos ed s oftw are developmen t are cons ulted.
They each es timate the project cos t. Their es timat es are compared
and dis cus s ed, and the es timat ion proces s iterate until an agreed
es timat ion is reached.

26.10)
Y es it is ethical if the cus tomer agrees w ith the price in advance,
becaus e ambiguity is the res pons ibility of the cus tomer.