A framework for the analysis of software cost estimation accuracy

Many software companies track and analyze project performance by measuring cost estimation accuracy. A high estimation error is frequently interpreted as poor estimation skills. This is not necessarily a correct interpretation. High estimation error can also be a result of other factors, such as high estimation complexity and insufficient cost control of the project. Through a real-life example we illustrate how the lack of proper estimation error analysis technique can bias analyses of cost estimation accuracy and lead to wrong conclusions. Further, we examine a selection of cost estimation studies, and show that they frequently do not take the necessary actions to ensure meaningful interpretations of estimation error data. Motivated by these results, we propose a general framework that, we believe, will improve analyses of software cost estimation error.