Economic rationale of high cost and slow delivery in software development
Authors: 
Yifan Wang, James R. WolfAuthors Info & Claims
Yifan Wang, James R. WolfAuthors Info & ClaimsPages 1 - 4
Abstract
Software development process management has been widely recognized as a critical domain for project success, both within and outside of the IT profession. Unfortunately, this process has been anything but smooth in practice. Many software projects are delivered with extremely high costs and painful delivery delays. Although IT professionals are now equipped with better development tools and management knowledge. Still, many challenges associated with software development have yet to be overcome. There are still an unacceptably high number of software project failures. In this paper, we investigate the case where software project development is contracted to outside professionals. We find that, by leveraging delivery pace or cost performance measure, software client can improve its payoff while upholding software developer's payoff unchanged. In other words, high cost and slow delivery represent management control mechanism in the software development process.
References
[1]
Balbien, J. and L. Wilde (1982): A dynamic model of research contracting. In Bell Journal of Economics; 1982 Vol. 13 Issue 1, p107--119, 13p
[2]
Banker, R. and C. Kemerer (1992): Performance Evaluation Metrics for Information Systems Development: A Principal-Agent Model. In Information Systems Research, 1992 Vol. 3 Issue 4, p379, 22p
[3]
Cummings, J. (1977): Incentive contracting for national defense: a problem of optimal risk sharing. In Bell Journal of Economics, 1977 Vol. 8 Issue 1, p168, 18p
[4]
Dewatripont, M. and E. Maskin (1990): Contract Renegotiation in Models of Asymmetric Information. In European Economic Review; 1990 Vol. 34, p311--321, 11p
[5]
Glass, R. (1997): Software runaways -- Some surprising findings. In The database for advance in information systems, 1997 Vol. 28, No. 3
[6]
Glass, R. (1998): Short-term and long-term remedies for runaway projects. In Communication of the ACM, 1998 Vol. 41, No. 7, page 13--15
[7]
Glass, R. (2001): Frequently forgotten fundamental facts about software engineering. In IEEE Software, 2001 page 110--112
[8]
Gopal, A., K. Sivaramakrishnan, M. Krishnan and T. Mukhopadhyay (2004): Contracts in Offshore Software Development: An Empirical Analysis. In Management Science 2004
[9]
Konakayama, A., T. Mitsui and S. Watanabe (1986): Efficient contracting with reliance and a damage measure. In Rand Journal of Economics; 1986 Vol. 17, p450--457, 8p
[10]
Kraut, R. and L. Streeter (1995): Coordination in Software Development. In Communications of the ACM, 1995 Vol. 38 Issue 3, p69--81, 13p
[11]
Richmond, W. and A. Seidmann (1993): Software development outsourcing contract: Structure and business value. In Journal of Management Information Systems, 1993 Vol. 10 Issue 1, p57, 16p
[12]
Scherer, F. (1969): The Theory of Contractual Incentives for Cost Reduction. In Quarterly Journal of Economics, 1969 Vol. 83, pp. 257--280
[13]
Shavell, S. (1984): The Design of Contracts and Remedies for Breach. In Quarterly Journal of Economics; 1984 Vol. 99, p122--148, 27p
[14]
Shemer, I. and E. Sibley (1987): Systems Analysis: A Systemic Analysis of A Conceptual Model. In Communications of the ACM, 1987 Vol. 30 Issue 6, p506--512, 7p
[15]
The Standish Group: Research on Software Chaos. Accessed from http://www.standishgroup.com/sample_research/chaos_1994_1.php
[16]
Wang, E., T. Barron and A. Seidmann (1997): Contrasting structures for custom software development: The impacts of informational rents and uncertainty on internal development and outsourcing. In Management Science, 1997 Vol. 43 Issue 12, p1726, 19p
[17]
Weitzman, M. (1980): Efficient Incentive Contracts. In Quarterly Journal of Economics, 1980 Vol. 94, 719--730
[18]
Whang, S. (1992): Contracting for Software Development. In Management Science, 1992 Vol. 38 Issue 3, p307, 18p
[19]
Whang, S (1995): Market provision of custom software: Learning effects and low balling. In Management Science, 1995 Vol. 41 Issue 8, p1343, 10p
Index Terms
- Economic rationale of high cost and slow delivery in software development
Recommendations
Software development: what it is, what it should be, and how to get there
Developing large software systems is notoriously difficult and unpredictable. Software projects are often canceled, finish late and over budget, or yield low quality results --- setting software engineering apart from established engineering ...
"Leagile" software development
In recent years there has been a noticeable shift in attention from those who use agile software development toward lean software development, often labelled as a shift "from agile to lean". However, the reality may not be as simple or linear as this ...
Economic Governance of Software Delivery
Agility without objective governance cannot scale, and governance without agility cannot compete. Agile methods are mainstream, and software enterprises are adopting these practices in diverse delivery contexts and at enterprise scale. IBM's broad ...
Comments
Information & Contributors
Information
Published In
Copyright © 2011 Authors.
Publisher
Association for Computing Machinery
New York, NY, United States
Publication History
Published: 04 August 2011
Published in SIGSOFT Volume 36, Issue 4
Check for updates
Author Tags
Qualifiers
- Research-article
Contributors
Other Metrics
Bibliometrics & Citations
Bibliometrics
Article Metrics
- 0Total Citations
- 219Total Downloads
- Downloads (Last 12 months)2
- Downloads (Last 6 weeks)0
Reflects downloads up to 07 Mar 2025
Other Metrics
Citations
View Options
Login options
Check if you have access through your login credentials or your institution to get full access on this article.
Sign in