SENG380: Software Process and Management Assignment 1 - Solutions

Q1) Specify which of the following is true and which is false. Comment on your answer. Given a discount rate of 12%, receiving 100 dollars today is better than receiving 60 dollars next year and another 60 dollars the following year. PV(60 after a year) = $53.6 PV(60 after 2 years) = $47.8 True ,NPV= $101.4 which is almost $100 so taking the 100 today is a good idea rather than waiting 2 years for an extra dollar. False, $101.4>$100. So waiting is better. Both answers are accepted as long as you put a reasonable comment. The waterfall model is suitable for manufacturing and construction industries. True Because projects related to manufacturing and constructions are usually complex (big projects) and redoing activities that has flagged as completed is costly and time consuming if not impossible. The waterfall model started as a hardware oriented model then was adapted to software projects. Cash flow forecasting of projects is not a simple process. True

Because a lot of the elements to be forecasted are still to happen in the future. Prototyping requires close proximity of developers and users. True Users are involved in the decisions and they have to test the prototype. We follow standards more carefully when developing an evolutionary prototype.

TrueBecause it will evolve to be the operational system so we have to follow standards more carefully. We should be concerned more with a serious risk that doesnt occur often than a less serious risk that happens frequently. True

On the condition that, the damage caused by the serious risk and its probability of occurring will cause worse damage than the damage caused by the other less serious risk that occurs more frequently. If the question was: We should be concerned more with a serious risk that isextremely unlikely to happen that was referred to in the notes as (-) than a less serious risk that happens frequently. The answer would be False. A SENG students project in his graduation year can be considered a prototype. 1

TrueThe system is not usually ready to be used by customers. Your project could be considered only a partial working model, where its features are either vertically or horizontally implemented. Your project output will be closer to a throwaway prototype since Your system is not developed for a specific organization that is waiting to adopt it, because You are not following standards specific to a particular organization. You are using convenient hardware and software based on what is available to you. You are testing some ideas. If someone will be interested in your product you will have to redo it following their standards, Quality criteria, and software and hardware platforms, make sure it will fit with other components in their organization. If you had a target organization in mind from the beginning during developing your project and you were following their standards.etc., it will be considered an evolutionary prototype.

Q2) Year 0 (today) 1 2 3 4 5 6 Net Profit Project 1 -8,000 4,000 4,000 2,000 1,000 500 500 4,000 Project 2 -8,000 1,000 2,000 4,000 3,000 9,000 -6,000 5,000 Project 3 -10,000 2,000 2,000 6,000 2,000 2,000 2,000 6,000

Based on the cash flow forecasts for the projects shown in the table above: Evaluate the three projects and choose one to pursue based on (NPV). Use 10%, 12% as two different discount rates. Using the 10% as discount factor:: Year Project 1 NPV Project 2 NPV 0 -8,000 -8,000 -8,000 -8,000 (today) 1 4,000 4000/(1.10)^ 1,000 1,000/(1.10)^1 1 2 4,000 4000/(1.10)^ 2,000 2,000/(1.10)^2 2 3 2,000 2000(1.10)^3 4,000 4,000/(1.10)^3 4 1,000 1000/(1.10)^ 4 3,000 2 3,000/(1.10)^4 their net present value

Project 3 -10,000 2,000 2,000 6,000 2,000

NPV -10,000 2,000/(1.10)^ 1 2,000/(1.10)^ 2 6,000/(1.10)^ 3 2,000/(1.10)^ 4

5 6

500 500 NPV

500/(1.10)^5 500/(1.10)^6 $1720.49

9,000 -6,000 NPV

9,000/(1.10)^5

2,000

-6,000/(1.10)^6 2,000 $1817.73 NPV

2,000/(1.10)^ 5 2,000/(1.10)^ 6 $1715.78

Using the 10% discount factor, Project 2 will be selected because it has the highest net present value.

Using 12% as discount factor: Year Project 1 NPV 0 -8,000 -8,000 (today) 1 4,000 4000/(1.12)^ 1 2 4,000 4000/(1.12)^ 2 3 2,000 2000(1.12)^3 4 5 6 1,000 500 500 NPV 1000/(1.12)^ 4 500/(1.12)^5 500/(1.12)^6$1,356

Project 2 -8,000 1,000 2,000 4,000 3,000 9,000 -6,000 NPV

NPV -8,000 1,000/(1.12)^1 2,000/(1.12)^2 4,000/(1.12)^3 3,000/(1.12)^4 9,000/(1.12)^5

Project 3 -10,000 2,000 2,000 6,000 2,000 2,000

NPV -10,000 2,000/(1.12)^ 1 2,000/(1.12)^ 2 6,000/(1.12)^ 3 2,000/(1.12)^ 4 2,000/(1.12)^ 5 2,000/(1.12)^ 6$1,070

-6,000/(1.12)^6 2,000$1,308

NPV

Using the 12% discount factor, Project 1 will be selected because it has the highest net present value.

Provide a new cash flow forecast for project 1, considering that the probability of obtaining the positive amount of money shown in the table for project 1 (cash inflow) is 60% and that otherwise half of that amount would be obtained in worse circumstances. Recalculate the net profit for project 1 accordingly. Year 0 (today) 1 2 3 4 5 6 Net Profit Project 1 -8,000 4,000 4,000 2,000 1,000 500 500 $4,000 3 New cash flow -8000 4000*.6 +2000*.4= 3200 4000*.6 +2000*.4= 3200 2000*.6 +1000*.4=1600 1000*.6 +500*.4= 800 500*.6 +250*.4 = 400 500*.6 +250*.4 = 400 $1,600

Q3) A project manager has two schedules in front of him to choose between for finishing the project, an aggressive schedule that if completed on time the company can have a chance of selling its product before other competitors which is calculated to result in a NPV of $500,000. If things went wrong with the aggressive schedule and resulted in producing the product late it is calculated to result in a NPV of -$300,000. Following a conservative schedule is calculated to result in a NPV of $350,000 if completed on time, and a NPV of -$150,000 if late. It is estimated that following the aggressive schedule the project probability of producing its product on time is 70% and the probability of producing it on time following the conservative schedule is 90%.

Using a decision tree, analyze the expected benefits of following the different schedules.

Expected value for the aggressive schedule = (500,000 * .70) + (-300,000 * .30) = $260,000 Expected value for the conservative schedule = (350,000* .90) + (-150,000 * .10) = $300,000 Which decision should be followed? We should go with the conservative schedule $300,000>$260,000.

Q4) A system to control an X-ray machine for taking medical images from the human body. 4

This is a safety critical system, process control system, probably n-version programing could be used to develop the system, where for instance several versions of the system could be developed and run in parallel to get x-rays and compare the x-ray image measurements to ensure accurate diagnoses. Probably it is a system that deals with a lot of graphics too, so appropriate techniques should be used. The spiral model is recommended for safety critical methods because each stage of the project with this model will be detailed and will be spent on a long time to ensure confidence in the system success and it will be terminated by an evaluation step before moving to the next activity.

A virtual reality system to explore the solar system. This is an interactive system, where simulated interaction is offered to the user. Simulated interaction is one of the prototyping forms. Phased development could also be used to develop this system. Requirements may not be clear or change. The payroll system of a company. This is an information system, which is application specific (specific to payroll processing). A methodology such as structured systems analysis and design method (SSADM) can be used. The waterfall model or its extension the V-process model can be used for this system because usually the requirements for the payroll systems are considered certain.

An interactive system for customers to find their way in a department store. This is an interactive system, an information system, it may be dealing with computer graphics (maps containing pictures and directions to items). The requirements may be unclear and the users involvement in deciding how the system will look like and what features could be required, will be helpful in designing it, prototyping could be used here at the stage of requirements gathering to make blurry requirements clear. Prototyping can also be used at the design stage to test out the users ability to navigate through the sequence of input screens of the system. Phased development could be also used to add extra functionality to the interactive system or enhance one of its existing functionalities in order to make it better. A Web-based transaction system. An information system, a methodology such as structured systems analysis and design method (SSADM) can be used. Prototyping, Phased Development, or Spiral models can be used Requirements may change, Risk assessment on business goal may benefit because the highly volatile nature of the Web-based development. 5

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