Statistical analysis of deviation of actual cost from estimated cost using actual project data

This paper analyzes cause and effect of the deviation of actual cost (measured by personmonth) from estimated cost for software development project. Although the obtained results themselves may not be new from the academic point of view, they may give a nice motivation for developers to join process improvement activities in the software company and thus become a driving force for promoting process improvement. To be precise, we show that if the projects are performed faithfully under the well organized plan(that is, the plan is first constructed according to the standards of good writing and then projects are managed and controlled to meet the plan), then the deviation of actual cost from estimated one becomes small. Next we show statistically that the projects with small deviation of the cost estimate tend to achieve high quality of final product and high productivity of development team. In this analysis, actual project data on 37 projects at a certain company are extensively applied.