The complexity of software development projects makes estimation and management very difficult. There is a need for improved cost estimation methods and new models of lifecycle processes other than the common waterfall process. This work has developed a new simulation model of the spiral development lifecycle as well as an approach for using simulation for cost and schedule estimation. The goal is to provide a tool that can analyze the effects of a spiral development process as well as a tool that illustrates the difficulties management faces in forecasting budgets at the beginning of a project which may encourage more realistic approaches to budgetary planning. A new discrete event process model of the incremental spiral development lifecycle approach was developed in order to analyze the effects this development approach has on the estimation process as well as cost and schedule for a project. The input data for the key variables of size, productivity, and defect injection rates in the model was based on analysis of Software Engineering Laboratory data and provided for analysis of the effects of uncertainty in early project estimates. The benefits of combining a separate system dynamics model with a discrete event process models was demonstrated as was the effects of turnover on the cost and schedule for a project. This work includes a major case study of a cancelled NASA software development project that experienced cost and schedule problems throughout its history. Analysis was performed using stochastic simulation with derived probability distributions for key software development factors. A system dynamics model of human resource issues was also combined with the process model to more thoroughly analyze the effects of turnover on a project. This research has demonstrated the benefits of using a simulation model when estimating to allow for more realistic budget and schedule determination including an interval estimate to help focus on the uncertainty of early estimates.

Nowadays, the nature of the projects has changed to be unique, uncertain, ambiguous,complex and innovative. It becomes hard to plan in advance the project progress, asdeviations from plans and unpredictable changes occur more frequently. This can bespecifically observed in the software development industry which needs to constantlymeet customers’ rapidly changed requirements. Traditionally, software projects aredeveloped through a plan-driven approach which emphasizes an overall project plan andcontrol process in terms of project management. Recently, this has been challenged byagile approach that focuses on flexibility to quickly meet changing requirements, andthese new agile methods provoked huge interest and got more and more popular andwidely applied especially in IT industry. However, the popularity does not mean theagile methods have advantage over traditional plan-based project management methods.In fact, both methods have own advantages and disadvantages and cannot be fullyreplaced by each other. Therefore, it becomes important and necessary for companymanagement to know how to select a suitable method for the new software developmentproject to get the maximum benefits.The purpose of this study is to describe different project management methods(traditional plan-driven and agile methods) and their various consequences for themanagement of software-development projects. Additionally, a more practical purposeis to suggest on what grounds a choice between methods may be made. Morespecifically, this research aims to provide the possible solution on how to selecttraditional plan-driven or agile project management method for managing a newsoftware development project. The research conducted a qualitative study in a casecompany of IT industry through several semi-structured interviews and questionnaireswith experienced and knowledgeable employees. It started with the analysis andcomparison of traditional and agile project management methods’ characteristics andapplication domains based on two specific examples (PROPS and Scrum) selected fromtraditional and agile project management methods respectively, in order to identify a setof preliminary outstanding characteristics which could be used to help IT company tochoose project management methods for new software development projects. Theempirical data obtained from interviews of case company was investigated to verifythese characteristics based on the literature review, and further adjusted thecharacteristics identification. After going through the whole research process, finallyresearchers identified the most suitable characteristics that were important both intheory and practice to examine on what ground a software development company needsto base the selection of project management methods. These suitable characteristics are:Project Complexity, Communication, Competencies and Requirements, in order to helpselect the best management way for the specific project.