How to determine if a Customization will generate savings?
One important activity is to evaluate the return on investment of the effort required to perform a Customization. The cost of a Customization should be lower than just applying all the changes manually throughout the code.
The cost of applying a manual change is a value that, unfortunately, cannot be generalized due to the different possible EWIs and the varying skill and experience of the person performing the work. A recommendation for determining this effort is to convert a small module or portion of the application, and measure the actual time required for each fix. The average time required for these fixes can be used as a starting point for the analysis. This number, however, should be adjusted to include the tiem required for other activities such as the actual time to apply the change, testing activities, the project management effort, and a contingency with additional time used to fix any new issue related to human error in places where the manual change was applied.
Once the cost for a manual change is determined, the following formula determines the savings of a Customization:
- CC: Estimated cost of the customization in US dollars
- ET: Average time required to fix one occurrence of a Manual Change
- OC: Total occurrences of the Customization Opportunity.
- IC: Cost of an hour of work in US dollars
For a customization to be cost effective, and generate savings for the project, the following formula:
should give you that the Estimated Cost of the customization (CC) is less than the cost of performing all the equivalent manual changes.