Appendix V: Estimating Software Costs

We highlight software cost estimation because of its significance and complexity in major systems acquisition. This appendix illustrates how the steps in cost estimating apply to the software development environment, so that auditors can better understand the factors that can lead to software cost and schedule overruns and to the failure to deliver required functionality.

We review typical cost drivers and risks associated with software development, sustainment, and infrastructure. In this context, we examine components of a software cost estimate and methods to estimate software size. Next, we apply this knowledge to estimate the software development efforts and discuss parametric methods that support estimates. We also touch upon the associated development schedule. In addition to software development, we consider software sustainment. We close with overviews of information technology (IT) infrastructure.