1. How would we know ...

 If we are being successful?

 If we are building the right products?
 If we are building our products correctly?
 If our productivity is improving, or getting worse?
2. Which project should we invest in? Explain.
 Project A:

Year 0 1 2 3 4 5

Estimated
-250 +70 +70 +70 +70 +70
Cash flows

 Project B:

Year 0 1 2 3 4 5 6 7

Estimated
-100 +18 +18 +18 +18 +18 +18 +18
Cash flows

3. Why is measurement important?

4. Who is responsible for measuring?
5. Business Value of Measurement?
 Why measurement is important to the business
 Who should be measuring
 Bài làm
1. How would we know ...
 If we are being successful?
 If we are building the right products?
 If we are building our products correctly?
 If our productivity is improving, or getting worse?

1.1. How Would We Know If we are being successful?

- Profitable revenue:
Explanation: Profitable revenue means the business generates more
income from selling products or services than the costs incurred to
produce and deliver them. This includes all expenses like production
costs, operational expenses, marketing, and distribution.
Importance: Profitable revenue is a fundamental indicator of a
company's financial health. It shows that the business is not only
covering its costs but also generating excess income, which can be
reinvested into the business or distributed to shareholders. Regularly
measuring and analyzing revenue helps ensure that the company
remains profitable and sustainable in the long term.

1.2. How Would We Know If we are building the right products?

- Customer demand:
Explanation: Measuring customer demand involves understanding
how much customers want or need your product. This can be
gauged through various metrics such as sales volume, customer
inquiries, market trends, and feedback. Surveys, focus groups, and
market research can also provide insights into customer preferences
and demand.
Importance: High customer demand indicates that the product is
meeting the needs and desires of the target market. It suggests that
the product is relevant, competitive, and has a place in the market.
Understanding customer demand helps in making informed decisions
about product development, marketing strategies, and inventory
management.
 - Highest return for lowest investment:
Explanation: This involves evaluating the efficiency and effectiveness
of resource allocation in product development and marketing. Key
metrics include Return on Investment (ROI), Cost-Per-Acquisition
(CPA), and Cost-Benefit Analysis (CBA). These metrics help
determine whether the resources spent on developing and
marketing the product are yielding the highest possible returns.
Importance: Achieving the highest return for the lowest investment
ensures that the company's resources are being used efficiently. It
maximizes profitability and ensures that investments are providing
adequate returns. This is crucial for maintaining financial stability
and enabling further growth and innovation.

1.3. How Would We Know If we are building our products

correctly?
- Product quality:
Explanation: Product quality is assessed by evaluating various
attributes like durability, reliability, functionality, and performance.
Metrics to measure product quality include defect rates, customer
complaints, return rates, and quality assurance test results. Quality
control processes and customer feedback are essential in
maintaining high product quality.
Importance: High product quality leads to increased customer
satisfaction, repeat business, and positive word-of-mouth. It reduces
costs associated with returns, repairs, and warranty claims. Ensuring
product quality is crucial for building a strong brand reputation and
gaining a competitive advantage in the market.

- Product delivery:
Explanation: Product delivery refers to the process of getting the
product from the manufacturer to the customer. This includes
production, logistics, and distribution. Metrics like on-time delivery
rates, lead time, cycle time, and throughput are used to evaluate the
efficiency and effectiveness of the product delivery process.
Importance: Efficient product delivery ensures that products reach
customers in a timely manner, which is crucial for customer
satisfaction. It minimizes delays and disruptions in the supply chain,
 reducing costs and improving overall operational efficiency. Effective
delivery processes also allow for faster feedback and iteration cycles,
enabling continuous improvement.

1.4. How Would We Know If our productivity is improving, or

getting worse?
- What is our current productivity?
Explanation: Productivity measures the efficiency of production and
how well resources are utilized to achieve outputs. Key productivity
metrics include team velocity (in software development), lead time
(time from initiation to completion of a process), and employee
performance (output per worker or per hour).
Importance: Measuring productivity helps identify areas where
processes can be streamlined, resources can be better utilized, and
output can be increased without proportionally increasing input.
Continuous improvement in productivity is essential for maintaining
competitiveness, reducing costs, and enhancing product quality and
customer satisfaction.
 2. Which project should we invest in? Explain.
 Project A:

Year 0 1 2 3 4 5

Estimated
-250 +70 +70 +70 +70 +70
Cash flows

 Project B:

Year 0 1 2 3 4 5 6 7

Estimated
-100 +18 +18 +18 +18 +18 +18 +18
Cash flows

Giải
Sử dụng phương pháp Giá trị Hiện tại Thuần (NPV) với giả định tỷ lệ chiết khấu
là 10%. Sau đó, sẽ tính tỷ suất hoàn vốn nội bộ (IRR) và thời gian hoàn vốn
(Payback Period) để đánh giá dự án nào nên đầu tư.

2.1. Net Present Value (NPV):

- Công thức:
Trong đó:
 Ct là dòng tiền tại năm t.
· r là tỷ lệ chiết khấu.
· C0 là chi phí đầu tư ban đầu.
Project A:
Năm Dòng tiền Dòng tiền chiết khấu (r = 10%)
0 -250 -250
1 70 70 / (1 + 0.1)^1 = 63.64
2 70 70 / (1 + 0.1)^2 = 57.85
3 70 70 / (1 + 0.1)^3 = 52.59
4 70 70 / (1 + 0.1)^4 = 47.81
5 70 70 / (1 + 0.1)^5 = 43.46

Tổng NPV = -250 + 63.64 + 57.85 + 52.59 + 47.81 + 43.46 = 15.35

Project B:
Năm Dòng tiền
0 -100
1 18
2 18
3 18
4 18
5 18
6 18
7 18
Dòng tiền chiết khấu (r = 10%)
-100
18 / (1 + 0.1)^1 = 16.36
18 / (1 + 0.1)^2 = 14.88
18 / (1 + 0.1)^3 = 13.53
18 / (1 + 0.1)^4 = 12.30
18 / (1 + 0.1)^5 = 11.18
18 / (1 + 0.1)^6 = 10.16
18 / (1 + 0.1)^7 = 9.24

Tổng NPV = -100 + 16.36 + 14.88 + 13.53 + 12.30 + 11.18 + 10.16 +

9.24 = -12.35

2.2. Tỷ suất hoàn vốn nội bộ (IRR):

Trong đó:
· r là tỷ lệ chiết khấu.
· NVP là giá trị hiện tại

Project A:

 Giả định:
o r1 = 10%
o NPV1 = 15.35 (dương)
o r2 = 20%
o NPV2 = -40.66 (âm)
 Công thức:
o IRR ≈ r1 + (NPV1 × (r2 - r1)) / (NPV1 - NPV2)
 Tính toán:
o IRR ≈ 10% + (15.35 × (20% - 10%)) / (15.35 - (-40.66))
o IRR ≈ 10% + (15.35 × 10%) / (56.01)
o IRR ≈ 10% + 15.35 / 56.01
o IRR ≈ 10% + 0.274
o IRR ≈ 12.74%

Project B:

 Giả định:
o r1 = 5%
o NPV1 = 3.10 (dương)
o r2 = 10%
o NPV2 = -12.35 (âm)
 Công thức:
o IRR ≈ r1 + (NPV1 × (r2 - r1)) / (NPV1 - NPV2)
 Tính toán:
o IRR ≈ 5% + (3.10 × (10% - 5%)) / (3.10 - (-12.35))
o IRR ≈ 5% + (3.10 × 5%) / (15.45)
o IRR ≈ 5% + 0.155 / 15.45
o IRR ≈ 5% + 0.010
o IRR ≈ 6.0%

2.3. Payback Period

Project A:

 Năm 1: -250 + 70 = -180

 Năm 2: -180 + 70 = -110
 Năm 3: -110 + 70 = -40
  Năm 4: -40 + 70 = 30
 Năm 5: 30 + 70 = 100

=> Payback Period ≈ 3.6 năm

Project B:

 Năm 1: -100 + 18 = -82

 Năm 2: -82 + 18 = -64
 Năm 3: -64 + 18 = -46
 Năm 4: -46 + 18 = -28
 Năm 5: -28 + 18 = -10
 Năm 6: -10 + 18 = 8
 Năm 7: 8 + 18 = 26

=> Payback Period ≈ 5.5 năm

Kết Luận

Dựa trên các chỉ số NPV, IRR và Payback Period, Project A là lựa chọn tốt hơn
để đầu tư vì nó tạo ra giá trị ròng cao hơn, có tỷ suất hoàn vốn tốt hơn và thời
gian thu hồi vốn ngắn hơn.

3. Why is measurement important?

Measurement provides data that can be turned into information

- Explanation:

o Measurement is the process of collecting quantitative data related to

various aspects of a project, product, or process. This raw data, by
itself, may not be useful or actionable.
o By analyzing and interpreting this data, we can extract meaningful
information. The process of transforming raw data into actionable
information is crucial for making informed decisions and driving
improvements.

- Importance:

o Having accurate and relevant data is foundational for making

informed decisions. Without measurement, decisions may be based
on assumptions or guesswork, which can lead to suboptimal
outcomes.
 o Converting data into information helps understand current status,
identify trends, and predict future performance.

We can use information to

- Make decisions:

o Explanation: Information from measurement allows decisions

based on data. This means decisions are evidence-based and
analytical rather than intuitive or based on personal opinion.
o Importance: Data-driven decisions are likely to lead to higher
success rates because they are based on facts. This minimizes risks
and increases the likelihood of achieving desired outcomes.

- Monitor processes and products:

o Explanation: Continuous measurement enables ongoing

monitoring of both processes and products. Key Performance
Indicators (KPIs) and other metrics are used to track performance
over time.
o Importance: Monitoring ensures that processes and products
remain within acceptable performance parameters. It helps identify
issues early, allowing timely intervention and correction.

- Determine if we are delivering value:

o Explanation: Measurement helps assess whether products or

services meet customer expectations and deliver value. Customer
satisfaction, usage metrics, and financial performance are some
indicators.
o Importance: Delivering value is crucial for customer retention,
fostering loyalty, and overall business success. Regular evaluation
helps adjust products and services to meet customer and market
needs.

- Identify if we are improving:

o Explanation: By comparing current performance data with

historical data, we can assess whether there is improvement. Metrics
like cycle time, error rates, and productivity can be monitored over
time.
 o Importance: Continuous improvement is necessary to maintain
competitiveness and achieve operational excellence. Measurement
helps identify areas needing improvement and monitors the
effectiveness of improvement initiatives.

- Conduct experiments:

o Explanation: Measurement allows designing and conducting

experiments to test hypotheses and evaluate changes. A/B testing,
pilot programs, and controlled experiments are examples.
o Importance: Experiments provide empirical evidence of what
works and what doesn't. This helps make informed decisions about
process changes, product features, and other strategic initiatives.

- Risk management:

o Explanation: Measurement helps identify and quantify risks. Risk

indicators, scenario analysis, and sensitivity analysis are tools that
can be used for risk management.
o Importance: Effective risk management minimizes potential
negative impacts on projects or business. It ensures that risks are
identified early, accurately assessed, and mitigated appropriately.

- Establish strategic business advantage:

o Explanation: Consistent and accurate measurement allows

businesses to gain insights that can lead to competitive advantage.
Understanding market trends, customer behavior, and operational
effectiveness can inform strategic decisions.
o Importance: Strategic advantage helps outperform competitors
and achieve long-term success. Insights from measurement can lead
to innovation, improved customer satisfaction, and enhanced
financial performance.

4. Who is responsible for measuring?

4.1. Project Manager
- Role:
The Project Manager is primarily responsible for establishing project
measurement indicators, monitoring progress, and performance of project
activities. They ensure that the project stays on track and meets the set
goals.

- Measurement Responsibilities:
+ Measuring project progress against the plan:
· Details: Track and compare the actual progress of the project with the
planned schedule. Use project management tools like Gantt Chart,
Kanban, or project management software to monitor progress.
· Significance: Ensure the project is not delayed and that short-term and
long-term goals are met on time.
+ Measuring resource utilization and efficiency:
· Details: Monitor the usage of resources such as manpower, equipment,
and budget. Use metrics like productivity, resource utilization, and cost
tracking.
· Significance: Ensure resources are used optimally, minimizing waste and
preventing budget overruns.

+ Monitoring alerts and issues to take timely corrective actions:

· Details: Establish early warning systems to detect potential issues before
they become major problems. Use real-time reporting and monitoring tools
to track progress and quality.
· Significance: Allow the project manager to take timely corrective actions,
minimize risks, and ensure the project remains on track.

4.2. Quality Assurance Manager

- Role:
The Quality Assurance Manager is responsible for ensuring that processes
and products adhere to established quality standards. They play a crucial
role in maintaining and improving product quality.

- Measurement Responsibilities:
+ Measuring defect rates and quality issues:
· Details: Use metrics such as defect count, defect density, and defect
severity. Collect data from defect management tools and testing reports.
· Significance: Help identify areas for improvement and ensure the product
meets quality standards.
+ Measuring the effectiveness of testing tools and techniques:
· Details: Evaluate the effectiveness of automated and manual testing tools
using metrics like test coverage, test execution time, and defect detection
rate.
· Significance: Ensure that testing tools and techniques are effective and
contribute to improving product quality.
+ Monitoring process compliance and continuous quality improvement:
· Details: Monitor adherence to established testing and software
development processes. Use metrics like process compliance rate and
quality audit reports.
· Significance: Ensure that testing and development processes are followed
correctly and continuously improved to enhance product quality.

4.3. Software Engineer

- Role:
Software Engineers are responsible for measuring and improving code and
software performance. They ensure that the software developed meets
functional and non-functional requirements.

- Measurement Responsibilities:
+ Measuring code complexity, performance, and maintainability:
· Details: Use metrics such as code complexity, response time, and code
defect rate. Use static and dynamic code analysis tools to collect data.
· Significance: Ensure that the code is maintainable, performs well, and
has minimal defects.
+ Tracking and reporting task completion progress:
· Details: Use task management and progress reporting tools to track
completed work. Use metrics like task completion rate and completion
time.
· Significance: Ensure that tasks are completed on time and meet
requirements.
+ Measuring the quality and performance of software features:
· Details: Use metrics like reliability, scalability, and compatibility. Use
performance testing and analysis tools to collect data.
· Significance: Ensure that software features meet quality and performance
requirements.

4.4. Executive
- Role:
Executives are responsible for ensuring that the company's strategic
objectives are achieved through measurement activities. They focus on the
strategic and overall aspects of the business.

Measurement Responsibilities:
+ Measuring the performance of departments and individuals:
 Details: Use metrics like employee productivity, departmental
performance, and other KPIs. Collect data from performance management
systems and activity reports.
· Significance: Ensure that departments and individuals are performing
effectively and contributing to the company's overall goals.
+ Monitoring the achievement of financial and strategic goals:
· Details: Use metrics like revenue, profit, growth rate, and other financial
indicators. Use financial reports and business analysis tools to collect data.
Significance: Ensure that the company is achieving its financial and
strategic goals, maintaining business growth and stability.
+ Evaluating overall company performance based on key measurement
indicators:
· Details: Use key performance indicators (KPIs) to evaluate the overall
performance of the company. Use reporting and analysis tools to collect
and analyze data.
· Significance: Provide an overview of the company's performance, help
identify areas for improvement, and make timely strategic decisions.
5. Business Value of Measurement?
 Why measurement is important to the business
 Who should be measuring
Why measurement is important to the business?

Measurement is a critical aspect of software development and business

operations for several reasons:

1. Predictability

 Business Goal: Ensuring the development of high-quality software

products within the set schedule and budget.
 Importance:
o Predictability in software development helps maintain product
value and revenue.
o It prevents cost overruns and helps maintain high morale among
the team.
o Predictability ensures customer satisfaction and helps avoid
company failure.

2. Safety

 Business Goal: Ensuring that software systems do not cause harm.

 Importance:
o System failures can result in severe consequences such as injury,
death, or destruction.
o Examples include the Discovery space shuttle's lost telemetry
data and the Therac-25 radiation overdose incidents.
o Measurement during the development process can prevent such
failures by identifying and addressing issues early.

3. Cost

 Business Goal: Controlling costs and avoiding financial losses.

 Importance:
o Faulty software can lead to significant financial losses, as seen in
the J Sainsbury's supply-chain management system failure and
the French national railroad company's reservation system issue.
 o Proper measurement ensures that software performs as
expected, avoiding costly failures and additional operational
expenses.

4. Customer Satisfaction

 Business Goal: Ensuring that customers are satisfied with the

software product.
 Importance:
o Customer satisfaction directly impacts the company's reputation
and success.
o Measurement helps in delivering products that meet customer
expectations, avoiding dissatisfaction and project failures.
o Successful ERP implementations highlight the importance of
meeting customer expectations through timely and budget-
compliant deliveries.

5. Brand and Image

 Business Goal: Maintaining a strong brand and image to drive sales

and profit.
 Importance:
o High-quality products, ensured through consistent measurement,
support a strong brand reputation.
o A solid brand image helps increase sales and profitability.

6. Innovation and Growth

 Business Goal: Encouraging continuous innovation and growth.

 Importance:
o Measurement supports continuous production of new and
innovative products.
o It attracts investors, ensuring the company’s prosperity.
o It provides software engineers with opportunities to work on
exciting, challenging projects, contributing to overall job
satisfaction and retention.

7. Risk Management

 Business Goal: Managing and mitigating risks.

 Importance:
 o Metrics provide early warnings of potential failures, allowing for
proactive risk management.
o Measurement helps assess the risk of releasing products in terms
of customer-reported problems.
o It also evaluates the feasibility of committing to projects based
on current resources and deadlines, ensuring realistic planning
and execution.

Who should be measuring?

1. Project Manager

 Responsibilities:
o Establish project metrics and track progress and performance.
o Measure project progress against the plan.
o Monitor resource usage and efficiency.
o Track alerts and issues to take timely corrective actions.

2. Quality Assurance Manager

 Responsibilities:
o Ensure compliance with established quality standards and
processes.
o Measure defect rates and quality issues.
o Evaluate the effectiveness of testing tools and techniques.
o Monitor process adherence and continuous quality improvement.

3. Software Engineer

 Responsibilities:
o Measure and improve code quality and performance.
o Track and report task completion progress.
o Measure the quality and performance of software features.
o Ensure the code is maintainable and performs well.

4. Executive

 Responsibilities:
o Ensure strategic objectives are met through measurement.
o Measure the performance of departments and individuals.
o Track financial and strategic goal attainment.
o Evaluate the overall company performance based on key metrics.