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Article
The Role of Defect Potential in Understanding the Economic Value of Process Improvements
AMCIS 2000 Proceedings
  • David Raffo, Portland State University
  • Warren Harrison, Portland State University
  • John Settle, Portland State University
  • Nancy Eickelmann, NASA IV&V
Publication Date
1-1-2000
Abstract
Software companies face relentless pressure to reduce costs, improve quality, and improve time-tomarket. To accomplish these objectives and to remain competitive, companies must improve their software development processes. Many process changes have been proposed as part of the Capability Maturity Model (CMM), SPICE, ISO and other standards. Financial techniques have been applied to assess the economic value of various process improvement activities. These include simple payback and cost-benefit ratios standard present value, risk and return formulations and options theory. In this paper, we introduce the notion of defect potential and propose a framework and high level model that, better accounts for fixed and variable costs and can be used for valuing and justifying process improvement activities.
Citation Information
David Raffo, Warren Harrison, John Settle and Nancy Eickelmann. "The Role of Defect Potential in Understanding the Economic Value of Process Improvements" (2000)
Available at: http://works.bepress.com/warren_harrison/3/