Keys to Successful IT Projects: An Executive Guide

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My Perspective

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My Perspective

Software Engineering ExpertContact with C-Level ExecutivesBusiness Owner/CEOPreoccupation with estimation...

Six Insights that C-Level Executives Already Know

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Six Insights That C-level Executives Already Know

Software projects are late Software projects are out of control Answers from software staff are often

incomprehensible C-Level executives are rational and intelligent

enough to understand these concepts Answers from software staff often seem

evasive Software is the most unpredictable part of the

business

The Seven Critical Insights

Insight #1

Typical Budgeting Processes Undermine Effective Development

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Typical Budgeting Processes Undermine Effective Development

Many organizations use “One Phase” budgeting processes

This is a poor match for the nature of software development

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The Cone of Uncertainty

0.67x0.8x1.0x

0.5x

0.25x

2x

4x

1.5x1.25x

Projectschedule

0.85x0.9x1.0x

0.8x

0.6x

1.25x

1.6x

1.15x1.1x

Time

Project scope(effort, size, features)

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A Too-Common Response to the Cone…

“You encourage range-based reporting. At three places I have managed, it simply has not been an option. In fact, at one board meeting our Director of Program Management was asked to leave the board meeting because of an attempt to use ranges. The quotation was approximately, ‘You don’t seem to understand that your job is to give me a date. If you can’t give me a date, you can’t do your job.’”

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Implications of the Cone

Accurate budgets can’t be set before significant preliminary work is done

Accurate budgets can be set after about 10-20% of the total project budget has been expended*

* You won’t know what the total project budget is until you expend the 10-20%, and so you can’t accurately calculate the 10-20% ahead of time

Insight #2

Stage-Gate Processes Are Prevalent In Leading Companies

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Stage-Gate Processes Are Prevalent In Established Companies

Example companiesSome amount of preliminary work is

necessary before an accurate budget or schedule can be set, because of the Cone

Insight #3

Low Quality Is The Single Largest Cost Driver

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Low Quality Is The Single Largest Cost Driver

50-80% of the typical project’s expense goes into unplanned rework

The most common reasons for this are Poorly defined requirements, which lead to

changing requirements Inadequate project planning Inadequate project management All of which are exacerbated by committing

too early in the Cone

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Lifecycle Cost Profile

Requirements Architecture Detailed Design

Construction Testing and Debugging

Rel

ativ

e Ef

fort

Typical Project (Pathological Project)

Advanced Project (Healthy Project)

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Lifecycle Cost Profile (cont.)

Requirements Architecture Detailed Design

Construction Testing and Debugging

Rel

ativ

e Ef

fort

Typical Project (Pathological Project)

Advanced Project (Healthy Project)

Unplanned rework

Process overhead

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IBM StudyProjects that focused primarily on schedule tended to overrun their schedule goals and were delivered with low quality; projects that focused primarily on quality tended to meet their schedule goals and were delivered with good quality”

Typical reaction when this is done well: “This project must not have been a good test case”

How to Respond to Low Quality

Insight #4

People (Staff) Exert The Largest Impact On Project Outcomes

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Significance of Individual Variability

According to Cocomo II calibrations, worst personnel will require 14x as much effort to produce software as best personnel

This basic finding has been replicated many times

Source: Software Cost Estimation with Cocomo II, Barry W. Boehm, et al, Prentice Hall, 2000

1.29x

1.40x

1.43x

1.51x

3.53x

Team Cohesion

Staff’s Platform Experience

Staff’s Language and Tools Experience

Staff’s Applications Experience

Personnel/Team Capability

Insight #5

Software Improvement Works Best When Supported at the Organizational Level

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Where Can Organizations Improve?

Execution Time Constraint

1.26

1.29

1.31

1.33

1.39

1.40

1.42

1.43

1.43

1.46

1.49

1.50

1.51

1.51

1.52

1.53

1.54

1.63

2.38

3.53

Flexibility of Requirements

Team Cohesion

Development for Reuse

Precedentedness

Architecture and Risk Resolution

Staff’s Platform Experience

Database Size

Staff’s Language and Tools Experience

Process Maturity

Storage Constraint

Platform Volatility

Use of Software Tools

Staff’s Applications Experience

Personnel Continuity

Documentation Match to Lifecycle Needs

Multi-site Development

Required Software Reliability

Product Complexity

Personnel/Team Capability

Within the organization’s control

Within the project’s control

Largely uncontrollable

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Organizational Level

Many factors must be addressed at the organizational level

Such as, the ConeSome work requires trading off short-

term project performance to benefit long-term organizational effectiveness

Insight #6

The Tradeoffs Between Cost, Schedule, And Quality Might Not Be What You Think They Are

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Tradeoffs Between Quality and Cost or Schedule

Low quality is already the largest cost driver for many organizations

Attempting to tradeoff quality makes cost and schedule worse

In addition, short schedules increase defects

Focus on improving quality, and cost and schedule will follow

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Interrelationships Between Cost and Schedule

Shorter-than-nominal schedules increase cost disproportionately

Longer-than-nominal schedules reducecost disproportionately

Larger teams tend to take more time, introduce more defects, and cost more

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Example: Team Sizes on Similarly-Sized Business Systems Projects

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101520253035404550

1.5-3 3-5 5-7 9-11 15-20

Team Size

Sch

edul

e (M

onth

s)

0

50

100

150

200

250

300

Effo

rt (S

taff

Mon

ths)

Schedule Effort

Insight #7

Improved Software Practices Offer Exceptionally High ROIs

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ROI for Selected Practices

Practice 12-month ROI

36-month ROI

Formal code inspections 250% 1200%Formal design inspections 350% 1000%Cost and quality estimation tools 250% 1200%

Long-range technology planning 100% 1000%Productivity measurements 150% 600%Process assessments 150% 600%Management training 115% 550%Technical staff training 90% 500%Source: Capers Jones, Assessment and Control of Software Risks, Prentice Hall, 1994.

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Overall ROI

Improved software practices pay an average ROI of 500% (including false starts), and continued improvement is sustainable for many years

The best organizations have sustained ROIs of 900% from software improvement initiatives for many years

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Overall ROI

Much of the ROI comes from avoiding rework (reducing costs)

Some of the ROI comes from improving predictability (increasing business opportunities)

Bonus Insight

Some Organizations Are Doing Very Well Indeed

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Improved Predictability in Air Force Projects

From a set of U.S. Air Force projects

Project Performance Compared to Estimate

0%

100%

200%

300%

400%

500%

600%

0 1 2 3 4

SW-CMM Level

Actu

al R

esul

ts a

s a

Perc

enta

ge o

f Es

timat

ed R

esul

ts

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Improved Predictability at Boeing

Estimation Error

Estim

atio

n Er

ror

0%

-150%

+150%

1 2 3 4 5

CMM Level

Historical data used for all project estimates

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Improved Predictability at Schlumberger

Week

-5Start date

(# of projects)90-1(3)

89-2(0)

89-1 (4)

90-2(3)

91-1(4)

91-2(2)

92-1(3)

0

5

10

15

20

25

30

35

37

Improved Quality at Telcordia

Software Systems Aggregate

47.3

40.2

28.5

9.27.2

3.3 2.6

0

10

20

30

40

50

60

4Q93 4Q94 4Q95 4Q96 4Q97 4Q98 3Q99

Faul

ts/K

FP

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Reduced Cost at Telcordia

$0.50$0.51$0.51

$0.62

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

1993 1994 1995 1996 1997 1998 3Q99

Cos

t/LO

C T

este

d &

Shi

pped

Business Model Target

$0.67

$0.44 $0.46$0.42

$0.53

$0.67

$0.84

$1.19

To Help Achieve These Results in Your Organization:sales@construx.comstevemcc@construx.comwww.construx.com(866) 296-6300