CMMI SCAMPI Appraisals are CHEAP, Relatively Speaking

Quite a few clients are surprised by the cost of a SCAMPI Appraisal. While a SCAMPI Appraisal may seem expensive, when considered within the context of what it costs to implement a process improvement program within an organization, well, a SCAMPI Appraisal is CHEAP, relatively speaking.

Industry data show that a Process Improvement (PI) effort takes on the order of a 5-7% investment of resources: planning, improving, training, measuring, estimating, quality assurance, configuration management, status, etc. Essentially 5 FTEs of your 100 FTE organization need to be dedicated to your PI effort. Similarly, PI will take 5 weeks of effort on your 100 week project and $5K will be spent on your $100K project. Industry data also show that you can expect to receive on the order of a 4:1 Return On Investment (ROI).

If you create a process group early on, and allocate the 5-7% that we expect it to take, when it comes time for the appraisal, you’ve already got the appraisal resources you need, without taking away from billable work at the always critical stage. The other people in the organization will also realize that senior management takes this effort seriously by their demonstrated and not just verbalized commitment to the effort.

PI, if it’s really important to your organization, needs to be treated like any other important project. To not give it the benefit of “Real Project” status is to all but doom it to failure. “Real Projects” get real project managers, they have Work Breakdown Structures (WBSs)/Task Lists/Deliverables, they have identified staff who are committed to the effort at a negotiated effort level at a specific frequency of interaction over a particular duration, real projects get budget, schedule, resources, training, standard processes, and senior management face time.

So . . .How much does an appraisal really cost; IT DEPENDS :-)

In a typical 300 person development organization it takes roughly 3 to 4 people to generate $1M in revenue. So our hypothetical organization is generating $75-$100M. A 5% commitment to PI would be $7.5-$10M. Please feel free to substitute your own numbers.

A 4:1 ROI benefit to the organization would be $30-$40M or 4 times the $7.5M investment (almost 50% equivalent improvement organizationally) in reduced waste, greater throughput capability, more profitability, increased customer satisfaction, fewer defects, faster turn-around time, etc.

A fully featured appraisal with all the bells and whistles, planning, training, consulting, paperwork, materials, travel, etc., should cost on the order of $100K. A $100K appraisal investment against a $10M PI Project investment is 1%. If your current project estimating methodology is not producing estimates that are accurate to within 1% of the actual outcomes, I can legitimately (tongue in cheek) make the argument, using your data, that the appraisal is free, because the margin of error exceeds the appraisal cost.

Get Started Now, things will never really change until you change them.