There is no simple, one-size-fits-all IV&V program. Because every project is going to be different, it’s difficult to accurately estimate IV&V costs in terms of specific dollar amounts. There are a few ballpark methods that can help people understand the financial undertaking involved with IV&V, but let’s first examine why these costs are tough to calculate.
Agile Options
Independent evaluation can come in many forms. Software testing, training evaluation, compliance review, and so much are all parts of the IV&V process. Not every project, however, will employ all the possibilities. Some companies may only want software testing. Others may only want IV&V at the beginning of the project to ensure goals match the trajectory of the development. Every project is different!
Even these components might look different across various projects, and that makes blanket pricing all but impossible. Until an IV&V service provider begins digging in to the scope of a company’s needs and forming a plan (which they are certainly capable of doing), it’s tough to even ballpark a figure.
Proprietary Processes
The fact of the matter is that IV&V remains an esoteric subject – and in many ways, that’s intentional. Most providers keep their pricing structure fairly hidden for a couple of reasons. First, they want to protect their unique approach to IV&V. This means they are a hesitant to describe processes in detail (and associated pricing) until a company or institution reaches out as a potential customer.
Secondly, IV&V providers recognize the murky territory described above. Instead of offering up pricing plans or broad estimates, they recognize the disservice they can do to potential clients. An uninformed price estimate will often lead to disappointment as details become more clear. Instead, most providers will simply work closely with clients to determine a unique scope and pricing that works for both parties.
Ways To Estimate Costs
Now, even with all of this discussion of how difficult it is to determine IV&V pricing, there are a few general guidelines for estimating the costs you may face hiring an IV&V team. The figures have varied slightly over the years (and across different studies), but most experts estimate that thorough IV&V will cost 5-10% of the total cost of the project. That is, if the project has a $10 million cost from start to finish, effective IV&V for the whole lifecycle will range from $0.5 to $1 million.
Again, there is no industry average here. Some people estimate these costs at 15-20% of project costs, others estimate lower percentages. It all depends on provider and scope, but this a good place to start. These rough percentages can carry over into the smaller pieces as well. If you can dissect your project into parts, the cost of IV&V for each component will often fall into this range of 5-10% of the total cost of that component.
Real Costs, ROI, and Saving Big Money
Now we get to the real meat and potatoes of this topic – ROI and the price you pay for NOT doing IV&V.
A common principle discussed in this industry is known as 1:10:100 – and it can be explained quite simply. If it costs $1 to fix an error early (through IV&V), that same error will cost $10 to fix in the traditional testing phase, and $100 to fix once the software goes live. Or, in more general terms, the longer you wait to fix a problem, the more it costs to fix.
This is the most important factor to consider when looking at the costs of IV&V. It may come with up front costs, but in the long-run, it actually saves you money. Not only does it help the effectiveness of IV&V to incorporate independent testing from the beginning of the process, it also means earlier error detection and fixing (and thereby, a lower cost per error).
Consider this: a $10 million project may have an IV&V cost of $500,000. That same project’s development, staff, in-house testing, etc. may have a monthly cost of, say $300,000… If IV&V can detect and repair problems early, the cost is fixed at $500k. Without IV&V, error detection and testing – especially “too late” in the development process – may stall the project, extending development time by several months… In this scenario, you can compare a $500k IV&V cost to a $900k delay cost (assuming the project is delayed by 3 months). In such a scenario, is IV&V even a cost?
With this framework in mind, it’s an investment at the beginning of your project that can yield massive savings in the long run.
To learn more about IV&V, implementing it into your projects, and some of the projected costs for your unique needs, feel free to contact us any time!
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