Economic rationale of high cost and slow delivery in software development

Abstract

Software development process management has been widely recognized as a critical domain for project success, both within and outside of the IT profession. Unfortunately, this process has been anything but smooth in practice. Many software projects are delivered with extremely high costs and painful delivery delays. Although IT professionals are now equipped with better development tools and management knowledge. Still, many challenges associated with software development have yet to be overcome. There are still an unacceptably high number of software project failures. In this paper, we investigate the case where software project development is contracted to outside professionals. We find that, by leveraging delivery pace or cost performance measure, software client can improve its payoff while upholding software developer's payoff unchanged. In other words, high cost and slow delivery represent management control mechanism in the software development process.