The Function Point Based Pricing Model: The Price is Right!
Many IT organizations face a difficult challenge managing contractual engagements with vendors for application development and maintenance services. Regardless of the pricing model or acquisition strategy, projects come in late and over-budget more often than not. Be it a time and materials, cost plus, fixed price or other contractual arrangement, both the vendor and client face the challenge of providing the functionality desired, minimizing risk, and ensuring that the vendor is able to generate a reasonable profit from the engagement.
All too often, these engagements are based on Software Lines of Code (SLOC). However, a disproportionate number of these SLOC projects usually end up over-budget, late, or terminated. This leads to finger pointing between the parties and a damaged business relationship that can end up in court. Both sides enter the agreement in good faith and high expectations for a successful outcome, so why do they frequently end badly?
The reason lies in the use of SLOC as the basis for pricing the contract. This presentation will illustrate the risks inherent in SLOC based pricing and provide a better alternative: Function Point based pricing model.
We will discuss establishing a FP based pricing program, challenges, and recommendations for successful sustainment of the program.
Daniel B. French
Mr. French has over a dozen years of experience in a variety of Information Technology roles including application analyst, developer, tester, software metrics and software project estimation. Additionally, he has developed CMMi and ISO compliant process improvement and software estimation processes.
He has been International Function Point User Group (IFPUG) member and Certified Function Point Specialist (CFPS) since 2000. He currently serves as Vice Chairman of the IFPUG New Environments Committee and is a former member of the IFPUG conference committee. He is also a member of SCEA, the Project Management Institute, the General Accounting Office (GAO) Cost Expert Group and is a Six Sigma Yellow Belt.
Mr. French holds a B.S. in Economics from the Virginia Polytechnic Institute and State University and is a graduate of the Chubb Institutes Top Gun training program.