Question

Q) Explain two factors that may affect the IT project cost estimation using your own words. Support your answer with examples.

Answer 1

Factors effecting cost estimation of IT Project.

1) Size of IT Project : As the IT project scales up or down it effects cost accordingly. Suppose your IT project has 10 nodes and some simple software ,say it costs $10000. Its scalability to 50 nodes or some minor or major changes in software will increase cost of project more than $10000 may be to $40000. So size of IT project affects the cost estimation of project.

2) Complexity of Project : As complexity of the IT project grows the cost will vary accordingly.Suppose your IT project has 5 modules and you need to add more functionality to the project, say you add 3 more modules to the project cost will be increased.For example if we have a IT system which consists of 5 nodes and a software which is used to enter data of employees of an organization, manage their activities. Now if we want to add a module which manages their salary their working hours,their grievances we may need modifications in software and a new node to look into greviances thus increase the cost.

3) Integration with other IT systems. Another factor which affects the cost estimation of IT project is its integration with the existing or other systems.As you have to make the standalone project the cost will be say $2000 and if you want to integrate it with another project the cost will increase. For example if you have a project in your company managing all the activities.Now of you want to tie up with a data centre to store your data there it will increase the costs to manifold.Reason for increasing costs is you have to put in place other equipments and costs dealing with data centre.

Please note that project cost may increase or decrease as well based on the facts whether the given factors are to be increased or decreased.