Software project acquisition

1. Software project
Acquisition
BBM 8th Sem
By: Er. Sudarshan Sharma

2. Why do software projects fail?
•The team has an unrealistic idea about how
much work is involved.
• From far away, most complex problems seem simple
to solve
• Teams can commit to impossible deadlines by being
overly optimistic and not thinking through the work
• Few people realize the deadline is optimistic until it’s
blown

3. Software Project acquisition
• Project acquisition is an activity carried out primarily by a
business acquisition team with the assistance of a technical team.
• In smaller organizations, project acquisition can be conducted by
a single person or a team, depending on the distribution of labor.

4. Types
• External client(prospective)
• Internal source
• Non soft
• Software org

5. External Client
Has following characteristics
• The project will result in revenue for the acquiring organization from
the external client.
• The software product resulting from execution of the project will be
used or resold by the external organization.
• The external organization will impose stipulations on quality, schedule, and
cost.
• End users will typically not be directly accessible to the software development
team. (The development team interacts with the end users via
a proxy )

6. Steps of acquisition of external clients
1. The request for proposal
2. The proposal
. Software estimation
. Delivery commitments
. Pricing the proposal
. Preparing the proposal
3. Negotiation
4. Contract acceptance

7. The request for Proposal
The RFP document normally contains
• Name of the prospective client and other details about the client of the project and other
details about the project
• Contact details for the project coordinator of the prospective client
• Scope of the work and TOR
• Bidding details, including the format of the bid document (either a single-bid system,
technical bid and financial bid in one document; or a two-bid system, technical bid and
financial bid in two different documents and submitted separately); any requirements for a
bank guarantee money deposit toward project execution warranty; etc.
• Procedure for evaluating bids that are received by the prospective client
• Important dates, including the date for requesting clarifications; the date for submission of
bid; the date for awarding of the project; etc.

8. The Proposal
• Software estimation
• Delivery commitments
• Pricing the proposal

9. Software estimation.
• Software estimation is carried out at this point to set a price for
the proposal.
• Estimators need to keep in mind that software estimation assists
project pricing, but is not the same as project pricing.
• Project pricing is a commercial decision.

10. Software estimation.
Software estimation has four dimensions:
• Estimation of the size of the software product to be produced
• Estimation of the effort in person hours or person days that will be required
to develop the specified software product
• Estimation of the cost that will need to be expected to execute the project
• Estimation of the duration (schedule) in calendar days or months that are
necessary to execute the project

11. Delivery Commitments
• are usually a part of a technical proposal, but as in project pricing, keep
in mind that delivery commitments are also a commercial decision.
• Delivery commitments depend on:
• The prospective clients requirements/urgency
• The competition (which might offer shorter delivery commitments)
• The possibility of a future project that will require the release of resources from
this project
• Any other specific reason
•

12. Pricing the Proposal
• Pricing is a complex interaction of various factors,
• including commercial considerations,
• the perceived necessity/desirability of acquiring the project,
• the opportunity at hand,
• pricing models considerations which dictate pricing for a project.
•

13. Pricing strategies
• Order book position:
• Necessity to obtain an order:
• Desirability of winning the order:
• Stiff competition in the field

14. Pricing strategies
• Monopolistic
• Oligopolistic
• Repeat orders
• New Market opportunity

15. Pricing Models
• Time and Material Pricing
• Cost Plus
• Opportunity
• Penetration
• skimming
• Going Rate

16. Pricing Models
• Monopolistic
• oligopolistic
• Transfer
• Loss Leader