The Role of Valuation in Value-Based Software Engineering

Current state-of-the-practice and state-of-the-art in software engineering (SE) typically focuses on cost issues and technical considerations for decision-making as costs are generally easier to measure than benefits. Value-based SE emphasizes the concept of ‘value’ in SE. However, so far the concept of value in SE is not well analyzed in its various dimensions. Furthermore, the process of measuring value, i.e. valuation, has mostly been discussed in the SE community from a mathematical perspective. In order to establish a comprehensive value-oriented valuation approach in SE we aim at applying valuation concepts from finance and economy, which try to appropriately quantify benefits, costs, and risks of a project or a project portfolio. We put a special focus on the value of information and individual preferences. We expect that such a value-oriented concept allows developing a more complete approach for project risk management.