Economics of software re-engineering

There is a pressing need to be able to calculate and to justify the costs of software re-engineering. The purpose of the paper is to address that need by establishing a framework for the economics of re-engineering. The objective of re-engineering is to reduce maintenance costs. This objective is served by increasing quality and reducing complexity. Both of these goals are examined here in the light of software maintainability metrics. The costs of re-engineering are driven by the size and interdependency of the software as well as by the degree of automation available. The paper presents a method of estimating the costs of re-engineering, and presents some figures acquired through practical experience. Finally, a method is defined for weighing estimated costs against expected benefits in order to support decisions on whether to renovate existing software or replace it by a new development. This is a major decision faced by many industrial managers today.