Importance of a well defined scope for your software project

quickfpaquickfpa subscriber Posts: 1 Member
Industry statistics prove that well over 60% of software projects fail to provide any return on investment. Most of these failures can be attributed to projects exceeding the budget. Software projects have too many variables and when these variables aren't accounted for, the chances of failure are higher.

There are two popular business models in software development.

1) Time & Materials Model
2) Fixed Cost Model

In time and materials model the developers get paid by the hour. The scope of the entire project is very loosely defined in this model. Development methodologies such as agile and scrum are widely used for this type of model. However, this model works only if the stakeholders have a good understanding of software development and are technical people themselves. For non technical stakeholders this model is like a rabbit hole. Without a sound knowledge of software project management the stakeholders are definitely going to lose a lot of money in this model and rarely get any return on investment.

Fixed cost model refers to determining the total cost of the project before starting the development. Most common cause of project failure under this model is poorly defined scope. Unless the scope of the project is extremely well defined, the project is bound to go into an indefinite loop of change requests, ending up in higher than estimated costs. The key to successful delivery under this model is to get a structured and well defined scope that outlines every detail of the implementation. These details must include the setup costs, implementation costs, testing costs, design costs and project management costs. The entire scope should be broken down by all the use cases for the software including every aspect of data validations and implementations.

Irrespective of the business model chosen for a software project, it is always wise to invest the time into preparing a well defined scope for the project before beginning any development. This keeps the project work on track and under budget. Using popular tools for software estimation can help save a lot of time and effort in this process. 


  • Ryan O'BlenessRyan O'Bleness Birmingham, Mich. administrator Posts: 1,118 Site Admin
    Thank you for those descriptions, @quickfpa. You make some valid points about both the time and materials model and the fixed-cost model. It seems as if both have pros and cons, but that is how just about everything works. I think a fixed-cost model needs to be strategically planned out, with every aspect being considered and re-considered, before execution. That way you are not limiting your resources and you can properly allocate a budget. 

    I am not as familiar with the time and materials model, but I do agree that it is much harder to conceptualize and see the value in something. 
    Ryan O'Bleness
    Community Manager
    StartupNation, LLC
  • tonytautonytau Chicagosubscriber Posts: 13 Bronze Level Member
    Fixed cost always have to charge more,  out acquiring a lot more risk.
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