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Here is an analysis of a CMM case study which shows that increased capability reduces time/cost.

 

The study is of Advanced Information Services Inc. (AIS), who measurably improved their time/cost by adopting and applying CMMI level 2 and 3 capabilities.

 

AIS Inc. reduced their time overrun from 112% to 5%, and their average budget overrun from 87% to –4%. Defects reduced to 1 per 20,000 lines of code, and as a result of reduced rework, staff started to work reasonable hours with higher productivity rates.

 

AIS Inc. were early adopters; their executive decided to adopt the CMM, because they realised the clear time/cost benefits and improved client relationships it brings. AIS is not alone, many other businesses who whole-heartedly decided to adopt can tell you the same story of time/cost improvements for the same or less effort.  SmartMatix itself can confirm similar findings from our $400 Million dollar project office data repository assembled during our tenure at NZ Post and Telecom NZ. We found that those projects which apply level 2 or level 3 practices fair significantly better than those which don’t.

 

AIS is now a CMMI level 5 company, and 17 years after they started their CMM/CMMI journey, are still very much in business. See for yourself at http://www.advinfo.net/Aweb2.nsf . Or read the abstract of the CMU/SEI report.

 

In-depth analysis …

Supporting the AIS case is this graph from the CMM AIS case study, which is annotated to show how increasing capability reduces time / cost:

 

What does this picture tell you?

This figure shows three stages AIS Inc. went through: at the start, projects operate at level 1 showing huge time/cost variations. After a while a stepped improvement occurs when level 2 is reached, followed by a further improvement when level 3 is reached.

 

At level 1 the average time / cost deviation is 100%, i.e. they go twice over time and cost. At level 2 AIS is making significant savings, and at level 3 they deliver as estimated / forecasted. So:

Level up = time/cost and variance (uncertainty / risks) down.

What does “Forecast 100%” mean

To be able to compare results, the report authors turn the original estimates into a baseline of “100%”. So if the project estimate was, say, $580 K, then that is “normalised” to 100%. Thereafter, if the actual cost turns out to be, say, $1,160 K then that is shown as 200%, i.e. meaning “+100%” over original estimate / forecast. By reducing the dollar figures to percentages one can very easily compare results.

And the Standish Chaos report annotation?

The time/cost behaviour at level 1 is very similar to the findings of the Standish group published in their first Chaos report (1996), being: “70% of software development shops deliver at twice over time and cost”. 

 

So it is not just the CMM/CMMI which finds that level 1 development projects go twice over time and cost.

Are these Chaos findings still valid?

Note that subsequent Chaos reports showed a decline in the number of companies exhibiting these poor results. Their 2006 report was rather optimistic and reportedly showed software development business units were doing a better job. However in their latest 2009 findings they talk of a significant decline in performance (see  http://www1.standishgroup.com/newsroom/chaos_2009.php )

Why the annotation ”even with new staff”?

The key difference of a truly level 3 organisation is in the induction training which all new staff (must) receive. Without induction training new staff won’t know what is expected and thus can only fallback on past experience. Hence before long a hodgepodge of work methods coincide, making the team capability (organisation) sub-optimal, and impacting time/cost. It’s like playing a game without a good set of rules and without training to make it second nature.

Looking at the time-line, will this take years?

No, it won’t.

When looking at the timeline it appears it took two or three years to achieve level 3. But in our view this is because the CMM is rather strict - it wants all projects to operate at level 3 in order to say that the entire organization operates at a different time/cost performance level. When you look at the diagram, in 1995 the projects already perform within the level 3 time/cost band. However, at that point in time, AIS probably hasn’t yet passed the audit of all level 3 KPAs (they may be one or two off).

 

However, as our own project office data clearly shows, you don’t have to “wait” for improved results till every project is operating at a certain maturity capability:

the benefits start with each project that applies level 2 capability

So, the benefits can start tomorrow!

How?

       Adopt your CMMI level 3 compliant process,

       get over the most significant hurdle of bi‑directional traceability of requirements and work products, so that you can manage scope and change

       Tune/fix-up the program/project governance

       Train and apply

 

 

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