A dynamic programming algorithm for optimizing the financial return of software projects

Abstract

The Incremental Funding Method (IFM) in software development projects aims at optimizing the financial return of a software project through proper sequencing of development activities and incremental releases of the software product. This paper presents a Dynamic Programming (DP) project scheduling algorithm that maximizes a software project's net present value (NPV) under IFM assumptions. Through an exemplar case study we demonstrate that the DP algorithm guarantees optimality in the project scheduling sequence and offers flexibility in adjusting the optimum project schedule dynamically, as market or development conditions change.