Cost estimation based on business models

Software development requires early and accurate cost estimation in order to enhance likely success. System complexity needs to be measured and then correlated with development e€ort. One of the best known approaches to such measurement-based estimation in the area of Information Systems is Function Point Analysis (FPA). Although it is reasonably well used in practice, FPA has been shown to be formally ambiguous and to have some serious practical de®ciencies as well, mainly in the context of newly emerged object-oriented modeling approaches. This paper reports results from an empirical study undertaken in Swiss industry covering 36 projects. We observed that a new formally sound approach, the System Meter (SM) method, which explicitly takes reuse into account, predicts e€ort substantially better than FPA. Ó 1999 Elsevier Science Inc. All rights reserved.