Return on Software: Maximizing the Return on Your Software Investment

Allowing for Inaccuracy Using Conservative Decision Criteria

A common—but potentially ineffective—strategy to allow for uncertainties is to use more conservative decision criteria. This includes increasing the MARR for more uncertain alternatives, shortening the study period, or requiring a shorter payback period. People tend to assume that if the alternative is still desirable in spite of the more conservative decision criteria, the alternative should still be desirable at the normal criteria even if one or more of the uncertain estimates turns out less favorable than hoped. The “padding” in the conservative decision criteria is expected to be an allowance for inaccuracy in the estimates. Unfortunately this strategy doesn't always work.

ALLOWING ...