The purpose of this step is to identify the software project risks, to assess their impact on the cost estimate, and to revise the estimates based on the impacts. Project risks affect all aspects of a software project: the organization, the personnel, the technology etc. One can distinguish between two types of risks:
Effective software project estimation is an important activity in any software development project. One of the main reasons software programs fail is our inability to accurately estimate software size. Because we almost always estimate size too low, we do not adequately fund or allow enough time for development. Poor size estimates are usually at the heart of cost and schedule overruns.