On the economic evaluation of XP projects

  • Authors:
  • Matthias M. Müller;Frank Padberg

  • Affiliations:
  • Universität Karlsruhe, Germany;Universität Karlsruhe, Germany

  • Venue:
  • Proceedings of the 9th European software engineering conference held jointly with 11th ACM SIGSOFT international symposium on Foundations of software engineering
  • Year:
  • 2003

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Abstract

From a project economics point of view, the most important practices of Extreme Programming (XP) are Pair Programming and Test-Driven Development. Pair Programming leads to a large increase in the personnel cost, and Test-Driven Development adds to the development effort. On the other hand, pp can speed the project up, both pp and Tdd can reduce the defect density of the code. Can the increased cost of XP be balanced by its shorter time to market and higher code quality? To answer this question, we construct a new model for the business value of software projects. We then analyze the cost and benefit of XP by applying our model to a realistic sample project. We systematically vary important model parameters to provide a sensitivity analysis. Our analysis shows that the economic value of, XP strongly depends on how large the XP speed and defect advantage really are. We also find that the market pressure is an important factor when assessing the business value of XP., Our study provides clear guidelines for managers when to consider using XP -- or better not.