A risk based economical approach for evaluating software project portfolios

ABSTRACT

Software engineers have been applying economical concepts to shed light upon the value-related aspects of software development processes. Based on credit risk analysis concepts, we present an approach to estimate the probability distribution of losses and earnings that can be incurred by a software development organization according to its software project portfolio. Such approach is built upon an analogy that compares software projects to unhedged loans issued to unreliable borrowers. As loans may not be paid back, software projects may fail, leading their development organizations to losses. By applying this approach, an organization may estimate the variability of its expected profits related to a set of software projects. Initial calibrating data were acquired by accomplishing an experimental study.

REFERENCES

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INDEX TERMS

Primary Classification:
  K. Computing Milieux
  K.6 MANAGEMENT OF COMPUTING AND INFORMATION SYSTEMS
      K.6.1 Project and People Management

Additional Classification:
  D. Software
  D.2 SOFTWARE ENGINEERING
      D.2.8 Metrics

General Terms:
Design, Economics, Experimentation, Measurement, Performance

Keywords:
empirical studies on software engineering, risk management, software engineering economics