Part 1: Cost Management

As with other methods of software development, the application’s size is a major indicator of how much it might cost to develop. In agile development, cost estimates are often made based on size measurements such as story points.

Each user story for the health-care app is assigned a number of story points based on estimates of how much work is needed to complete each major task. Based on prior experience with agile projects, the accounting staff at Third Avenue Software has determined an average dollar production cost for a story point: $1200.

However, the staff accountants are not completely confident in this average dollar value because Third Avenue’s experience with agile projects is not extensive. The accountants would like the team to confirm their calculations, if possible.

As you learned in Module 7, earned value management (EVM) is a more traditional project management method for determining whether a project is meeting time and cost goals. EVM requires calculation of three values for each major activity in the project:

  • The planned value (PV), which is the authorized budget assigned to scheduled work
  • The actual cost (AC), which is the realized cost for the work performed on an activity during a specified period of time
  • The earned value (EV), a measurement of project work done, framed in terms of the approved budget for the work

Several more values and formulas are involved in EVM.

Assume that the Third Avenue team assigned story points to the health app features as the following:


Story points

  1. Fitness tracker for recording health information (e.g., blood pressure and cholesterol)

30 story points

  1. Medication tracker (“electronic pillbox”) with calendar and alarm notifications

30 story Points

  1. Electronic address book for contact data of doctors and other health-care professionals

20 story points

  1. Emergencies list for storing vital phone numbers and addresses to provide quick access to hospitals, urgent care clinics, etc. List entries will trigger interactive GPS mapping software to help locate hospitals and other health-care venues

60 story points

  1. Emergency information list in which customers store important data about themselves in case of emergency

20 story points

  1. Resources feature that lists links to other popular online health sites

10 story points

  1. Payment feature that tracks health expenses and allows customers to make payments through their phones

40 story points

  1. Usability issues

40 story points


  1. Calculate the total production costs of Third Avenue health care application. Recall, the average dollar production cost of a story point is $1200. Do the project costs appear to be within the overall budget of $350,000?
  2. Assume that you have completed one month of the health-care app project and have some reliable EVM data for cost accounting. Remember that the budget at completion (BAC) is $350,000 for the four-month project. You have received the following figures from the Third Avenue accountants:

PV $105,000

EV $122,000

AC $105,000

Using this information, answer the following questions.

  1. What is the cost variance, schedule variance, cost performance index (CPI), and schedule performance index (SPI) for the project?
  2. Use the CPI to determine the estimate at completion (EAC) for the project.
  3. Based on your answers, does the project appear to be on schedule and within budget?

Part 2 Quality Management

Managers at Third Avenue are eager to see evidence that the Quality Assurance staff are making progress in their ability to test the health-care app. They have asked the team to provide at least a basic framework of test specifications.


  1. The health-care app will undergo rigorous software testing by the Third Avenue Quality Assurance staff, using test plans that might fill entire binders. At this early point in the process, however, such plans are still in development. Develop a short list of quality requirements for testing at least three of the important app features. In your list, briefly describe each requirement.

For example, here is a short (and far from complete) list of quality requirements for the emergencies list feature, which stores vital phone numbers and addresses as well as provides quick access to local in-network hospitals, urgent care clinics, and children or friends who can be relied upon to provide transportation in an emergency:

  • Do all of the data-entry fields accept text without problems? For example, long entries in a field can sometimes be clipped or truncated prematurely, which is frustrating to users.
  • Is it possible to enter nonsensical data in a field? For example, users should not be allowed to type text characters into a field that records phone numbers.
  • Does the software automatically move the user from one entry field to the next? Does the cursor always appear in the next entry field as a means of visual feedback for the user?
  • As soon as the user enters and saves an address, an interactive GPS map should become available in a new window, with voice and text directions. Does the window appear? Does it appear immediately?
  • When you slide your finger to create the effect of movement within the map, does the software redraw in a timely manner?

Note: You can only use the previous example as a guide. You need to develop a list of quality requirement for testing three features excluding the emergency list feature discussed above.

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