Milestone 3: Proposal Report

Description of the Issue 

Errors in recognizing, collecting, and processing software development project costs can result in invalid and/or untimely project cost reports, which, in turn, can cause delayed or incorrect project cost performance assessments and forecasts and implementation of corrective actions. As a consequence, there is the risk of delayed delivery of the product as well as cost overruns, which are a dent to the financial health of the organization as well as its reputation, which is critical in the marketplace.  

Mansor, Razali, Yahaya, Yahya, and Arshad (2016) explain that cost management in software development is a significant challenge. The article further asserts, having poor cost management systems is a precursor for problems related to delay in delivery of the projects and cost overruns. Software development is a combination of different inputs from people with diverse expertise, including project managers, testers, developers, business analysts, users, testers, security, and Quality Assurance among others. All these professionals majorly focus on the quality of the product while the cost element is left to the project manager, accountants, and finance specialists.

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Software development has numerous cost centers, some which emerge later in the project life. Clients or user departments often adjust product features during the product’s development cycle. Additionally, software development often requires the integration into third-party systems, which is an activity that calls for additional costs. Security tests and risks also constantly expose the need for additional efforts and expertise to ensure that the product has the integrity that the organization is known for. Errors in making such estimations for cost centers, which are sometimes unforeseen compound the problem of delayed delivery and cost overrun. 

Impacts on Project Cost Monitoring/Controlling Activities

Erring in recognizing, collecting, and processing software development project costs have been demonstrated to have two major effects. First, it results in delayed project cost performance assessments and forecasts and second, implementation of corrective actions. With delayed project cost performance assessments and forecasts, the risk of overshooting the budget is a challenge to the company. Overshooting the budget is a problem in that it erodes the economic sense of engaging in the project as well as adversely affecting the organization’s sustainability element. When corrective actions are not undertaken at the earliest possible time due to delayed assessments, it aggravates the matter since the effects might exponentially increase. This leaves the organization at a very precarious position, and being a public organization, detrimental effects can follow such as reduction in budget allocation, which would complicate matters further. To change the current narrative, the following recommendations should be considered. 

Recommendation of Solutions 

Mansor, Razali, Yahaya, Yahya, and Arshad (2016) found that the most important challenges in the management of software development costs are lack of expertise in agile, unavailability of computerized tools, poorly defined success factors, and lack of actual commitment among project teams.

Adoption of Cost Control Technologies 

Cost control technologies can define the importance of cost control. With such technologies, the organization can assess the entire cost aspects associated with the project as described by Meredith and Mantel (2011). These technologies are able to give such assessments in minutes. Cost control software is often capable of conducting evaluations, optimizations, and control of aspects relating to cost management in an easy and efficient manner. Cost control software is capable of comparing baseline costs with actual costs incurred as explained in Agile Practitioners Guide (2017). Technology in this sense is capable of easing the load on project managers so that they can focus on their major roles, which is to provide leadership. 

Define Success Factors

The development of a highly efficient software development model is the key to controlling costs. One proven method is the Agile methodology. In the methodology, it is not necessary to determine the scope of the entire software development project from the start. This is a unique design that recognizes that different software development projects are unique and different. For instance, as Sun and Schmidt (2018) elaborate, the Agile methodology allows for the addition of new features during development besides making changes to the project at any stage of development. As such, the quality of the project is assured and cost planning is possible before anticipated changes are included. Short projects (that take less than 6 months to complete) are however not in the need to use the methodology since a straight model with rigid costing can be applied. Sun and Schmidt (2018) acknowledge that besides direct cost controlling and assessment opportunities presented by the Agile methodology, it reduces labor costs due to the motivation it provides the project team. 

Prioritization of costs

Ensuring that costs are effectively controlled through prioritization requires a methodology that gives special consideration to the features that are needed in the software in question. Having a sophisticated project is likely to put costs on the upward trajectory and in most cases, in an uncontrollable way. Controlling costs before they get wild is necessary but it is only possible through proper assessment of cost centers. Prioritizing is a solution to this possible pitfall. The very important features of the software should be developed and the others can follow. To achieve effective prioritization, MoSCoW analysis is a proven technique. It works as follows as described by the International Institute of Business Analysis (2009); 

  • Must have 
  • Should have 
  • Could have 
  • Won’t be necessary this time. 

The working of this analysis is hinged on the discipline of not adding new features until those features are necessary. It is a mechanism to evaluate/assess features and associated costs before they are implemented. As such, it ensures that features are not added unless they bring value to their users. Return on investment is better conducted with the methodology and ensures that costs are not incurred out of impulse but rather after a careful assessment of the value the same would bring. 

Cultivating a Culture of Commitment Among Project Team Members

Project teams should be motivated to commit to cost control right at the onset of the project. As such, the project is allowed to come close to the team by allowing them to be part of the decisions that influence the project. When everyone is in the understanding of the project, they tend to take ownership of the project in all aspects including cost control. It is the observation of Serra and Kunc (2015) that gaining the support of teams, both senior and junior, is a function of effective communication of the value of the project. A strategy that improves collaboration rather than competition among team members is important in developing leadership. As such, Lindsjørn, Sjøberg, Dingsøyr, Bergersen, and Dybå (2016) explain that strategies such as providing effective leadership, inspiring confidence to the team, and providing members with opportunities for growth are important in developing commitment, which is critical in cost assessment and control. The development of a team that acknowledges that a project’s success involves cost controlling is critical and eases the cost assessment and control on the part of the project manager since it becomes a team effort. Management must devise means to ensure that the staff is adequately motivated to achieve these goals.

Costs of Implementing the Above Recommendations

Ensuring that our organization responds to cost control strategies as discussed above is important. However, it is an element that comes with time and financial costs before results can be seen. Acquiring cost control technologies is as simple as having a software installed in the organization and having users trained on how to use the software. Defining success factors, prioritization of costs, and cultivating a culture of commitment among project team members are factors that can be inscribed into the team socially. It requires the cultivation of trust right from the time the project is beginning and the explicit mentioning of expectations that management has on the team members. On the other hand, management should be sure to provide an environment where project members feel responsible for the project to the level of taking upon themselves to control costs. The financial costs of implementing the last three recommendations are up to management to decide especially since it significantly touches on team member motivation as well as the presentation of opportunities necessary for their professional and personal development. For instance, there can be programs for team building, professional development, and personal support. The distance between management and project team members is critical to the attainment of the recommendations. The management should have structured programs to reduce the gap.


Agile Practitioners Guide. (2017). Newtown Square, PA: Project Management Institute.

International Institute of Business Analysis. (2009). A Guide to the Business Analysis Body of Knowledge (BABOK Guide), Version 2.0. International Institute of Business Analysis.

Lindsjørn, Y., Sjøberg, D. I., Dingsøyr, T., Bergersen, G. R., & Dybå, T. (2016). Teamwork quality and project success in software development: A survey of agile development teams. Journal of Systems and Software, 122, 274-286.

Mansor, Z., Razali, R., Yahaya, J., Yahya, S., & Arshad, N. H. (2016). Issues and challenges of cost management in agile software development projects. Advanced Science Letters, 22(8), 1981-1984.

Meredith, J. R., & Mantel Jr, S. J. (2011). Project management: a managerial approach. John Wiley & Sons.

Serra, C. E. M., & Kunc, M. (2015). Benefits realisation management and its influence on project success and on the execution of business strategies. International Journal of Project Management, 33(1), 53-66.Sun, W., & Schmidt, C. (2018). Practitioners’ Agile-Methodology Use and Job Perceptions. IEEE Software, (2), 52-61.

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