Is This Cost Estimate Reliable? -- The Relationship between Homogeneity of Analogues and Estimation Reliability

Abstract

Analogy-based cost estimation provides a useful and intuitive means to support decision making in software project management. It derives a cost estimate required for completing a project from information about similar past projects, namely the analogues. While on average this method provides a relatively accurate cost estimate there remains a possibility of large estimation errors. In this paper, we empirically tested the hypothesis that "using more homogeneous analogues produces a more reliable cost estimate" using a software engineering data repository established by the software engineering center (SEC), Information-technology Promotion Agency, Japan. This testing showed that low and high homogeneity projects had a large variation in estimation reliability. For instance, the difference was 22.9% (p = 0.021) in terms of percentage to get accurate estimates (better than Median of Magnitude of Relative Error).