Activity Based Cost Management in Software Re-Engineering Project

APPLICATION OF ACTIVITY BASED MANAGEMENT TO SOFTWARE RE-ENGINEERING PROJECT

The following depiction of a real-time software project scenario deals with re-engineering of a solution built using technology A and re-deploying it using technology B.

ACTIVITY BASED COSTS ALLOCATIONS/ESTIMATION

Based on initial discovery and brainstorming sessions with client teams, the expert team was able to analyze and arrive at the below shown estimates for project completion,

Project Activities % Effort In Man-hours

Requirement Analysis 0.00% 0.00

High level design 0.00% 0.00

Detail Design 15.00% 75.00

Build (Coding and Developer testing) 60.00% 300.00

QA & Integration Testing 15.00% 75.00

Documentation 10.00% 50.00

ETL Totals 100.00% 500.00

Project Management 5.00% 25.00

Contingency 10.00% 50.00

Total 575.00

Billing Rate per Hour $60.00

Total Estimated Cost $34,500.00

The above estimation allocated the costs only to those activities where the development team would be spending their time on.

• As you notice, requirements analysis and High level design did not have any cost allocation as those steps were not required as per the initial brainstorming discussions.

• Also, the Build by developer was marked as the fulcrum activity and the allocation was 60% for this step.

• The 300 person hours which contributes to 60% of the cost was arrived at by T-shirt sizing the code in Technology A and guesstimating a possible equivalent time to be taken if re-coded in Technology B. This was more like a ballpark number or a gut feel estimation.

• All the other activities shared the remaining 40% of cost and were split based on respective intensity of effort based on previous experiences.

• Additional 15% of the effort was added on top of the final number to cover for the project management and any unprecedented surprises which may arise.

ACTIVITY ANALYSIS BASED ON ACTUAL DATA – RESTROSPECTIVE ANALYSIS

The project...