The Big Development Project: How much should it cost?
Some people think that agile and budgeting are incompatible. The product is ready when the product owner says it is. But before starting a project, most managers want at a least budget. So the product owner puts together his wish list and asks the ScrumMaster what it will cost to build. The answer comes back – usually a long time and whole lot of money! Then the customer turns pale as he tries to decide what it will really cost, whether he can afford it and whether it’s worth it.
But there is a better way: the product owner can perform a double worst case analysis. This quick and easy tool uses the project’s business value to determine a reasonable price for the software investment.
Scenario: You are the product owner. Your company, Congo Lomerate Corporation, plans to automate its internal operation by developing a tool for its staff, “TurboCongo.” Over the next 5 years, TurboCongo should produce cost savings and additional revenue of €10 Million. You have developed a list of User Stories and given it to your team. Their response: “Yes, we can do it! Including support it will cost €2.6 Million.” Is that a good investment?
The fundamental financial project risks are 1) the benefit will be less than anticipated or 2) the costs will be higher than anticipated. A significant delay in the project increases the cost and probably reduces the benefit. Even if both occur, the investment in the project should still be more attractive than putting the money in a savings account.
