How to determine total cost of the project?

Last post 12:52 pm November 16, 2019
by Olivier Ledru
10 replies
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12:55 pm November 14, 2019

Scrum encourage change and Planning is constantly activity with focus on one or 2 future Sprints, right?

QUESTION: If so, how to determine total cost of the project because total cost depends on total scope of the project?

Thanks

Dejan

07:22 pm November 14, 2019

@Dejan Majkic, The scope of a project in reality may change i.e. either more scope or less scope. If we are iteratively and incrementally delivering potentially releasable Increments, then after a few Sprints we might be able to get an idea of the cost expended on each Sprint (c), we might also be able to forecast the number of Sprints (n) needed to complete the total scope.

Using that info, might it be possible for us to get a forecast of the total project cost i.e. n x c ? 

06:17 am November 15, 2019

how to determine total cost of the project

If it was possible to know that in advance, and matters were that predictable, would Scrum be a good choice?

In Scrum, each Sprint may be seen as a project, the planning horizon of which ought to be realistic and for which funding requirements can be determined.

08:55 am November 15, 2019

But what if you represent Public company or Government organization, and you need new Information system, you have too know how much it will cost at the end so you can plan this amount of money from the public budget and of course to open public procurement for this project.

09:32 am November 15, 2019

@Dejan Majkic Life is life and it proved a number of times that regardless of how hard you try to calculate the cost of a complex project up-front, it is always just a fairy-tale. That is a change in a mindset, that you probably need to address - when you have a fixed budget, then you have to be flexible on scope, otherways it's the opposite. There are no shortcuts here. To cope with that risk, we utilize short iterations to fail, learn and adapt as fast as possible.

06:29 pm November 15, 2019

QUESTION: If so, how to determine total cost of the project because total cost depends on total scope of the project?

I can answer it really easily. Wait until  you are 100% sure that no one will ever dedicate any time on it (no users, no developers, no ops, no legal, no nothing) ever again for the entire future of humanity. Then add up all you spent on it. Then you'll have the total cost of your product.

Not a nice answer but a true one.

07:42 pm November 15, 2019

From your answers I guess that Scrum framework is not so good idea for Government agencies or public companies.

Unless, government use FBI Sentinel scenario and employ Scrum masters to work with them...

08:02 pm November 15, 2019

How many projects can you name that had a complete estimate in work and costs, completed on time, with all the specs met, within the predefined budget, without any further costs incurred in sustaining the product delivered?

08:20 pm November 15, 2019

Let me put it another way.

Agile is about uncovering better ways of developing software. Not about finding ways to justify doing what you always did. (I've learned a great acronym last week: SQWAT. Status Quo With Agile Terminology.)

An important part of agile initiative is to convince people to embrace new practices. Many here have worked in highly regulated organisations etc.. Is it easy? No! But that's what makes it so rewarding to be in a position where you can help get it going anyway.

09:09 pm November 15, 2019

@Dejan Majkic Why do you think that it is not a good idea? What is the point of calculating the cost of 'the entire scope' of a project, if it won't be even close to being accurate? Most of the time you will find that it is undercalculated, and scope is changed - that is the challenge that needs to be addressed.

As a Government / Public agency, you can define what is your max budget for it, in current times you can probably gather some data about projects with similar anticipated scale, or just take a median cost spent on software development in Government / Public agencies in that sector and start from there. You need to accept that if you fix the total cost of the project, then you need to be flexible with the scope.
 

Of course, you can try run it traditionally and define the entire scope, calculate it upfront etc. Then cross fingers that it will be a success story, there is a chance for it, but most of the time it won't be that way. Even with Agile you have not guaranteed success, but available data shows that success rate is higher with Agile approach - you can start digging from there: https://vitalitychicago.com/blog/agile-projects-are-more-successful-traditional-projects/

12:52 pm November 16, 2019

A thermometer (and actually any tool) can't predict tomorrow weather. Is this a bad tool ?