Developing an activity-based costing approach for system development and implementation

  • Authors:
  • Ginny Ooi;Christina Soh

  • Affiliations:
  • Nanyang Technological University;Nanyang Technological University

  • Venue:
  • ACM SIGMIS Database
  • Year:
  • 2003

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Abstract

This paper proposes the use of the Activity Based Costing (ABC) approach to software estimation. Like other more traditional approaches to software estimation, ABC provides man-day estimates. In addition, it also provides detailed costing information that is useful for management control and decision making. The paper shows how the ABC approach can be applied to software estimation by building an ABC model using data from twenty-two projects in a financial services firm. The model is then used for estimation, and comparisons between estimated and actual man-day are computed (variance analysis). The data generated by the model and from the variance analysis are useful for management control and decision making in areas such as resource allocation, outsourcing of specific development activities, and learning from adoption of new development tools and practices.