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How to Avoid Selecting Bids Based on Overoptimistic Cost Estimates

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1 Author(s)
Magne Jørgensen ; Simula Research Laboratory

This article documents important connections between cost overruns and bidding. It also recommends how clients should design their bidding process to avoid selecting bids based on overoptimistic cost estimates. The recommendations provided reduce the risk of initiating projects that have unrealistic plans, time overruns, low software quality, high maintenance costs, and inflexible providers. Although this article aims to improve the clients' bidding processes, the authos believes that it also has important implications for software providers. They could use the reported results to identify bidding rounds that they're likely to win only if they provide a bid based on strongly overoptimistic cost estimates. Software providers should consider carefully whether it's worthwhile to participate in bidding rounds in which this is the case.

Published in:

IEEE Software  (Volume:26 ,  Issue: 3 )