Formal Aspects of Computing (1997) 9:349 358 Formal Aspects of Computing Using a Formal Specification C. O'Halloran 1, R. Arthan 2 and D. King 3 IDERA Malvern, Worcestershire, UK 2LEMMA1, Twyford, Berks, UK 3Hoskyns Group plc, London, UK Contractually* Keywords: Outsourcing; Cost; Formal specification; Ada; Z; SPARK; Literate programming Abstract. A commonly made criticism of formal methods is that they increase costs. Selective use of formal methods to define critical requirements can, however, lead to a significant decrease in lifecycle costs. In particular the economic and technical benefits of outsourcing the development of software can be fully realized and the cost of outsourcing slightly reduced by use of a formal specification. In this paper we describe a development in which a formal specification prepared by the customer formed part of the contract with the supplier. We conclude that this use of a formal specification can reduce risks and costs for all concerned and can help foster fruitful and co-operative relations in situations which are often fraught with confrontation. 1. Introduction The expertise and experience of people required to define an application in a particular domain does not mean that those people are best placed to implement the application, even in the domain of software engineering. There are economic benefits for outsourcing the development of applications and there are technical advantages of importing specialised skills to give added value to an application. There are however significant disadvantages such as: the risk of procuring an application which does not meet the customer's requirement; cost escalation due to ill defined requirements; inappropriate shift in risk from the customer to the supplier; and loss of intellectual control over the application. * @ British Crown Copyright 1997/DERA. Published with the permission of the controller of Her Britannic Majesty's Stationery Office. Correspondence and offprint requests to: Colin O'Halloran, DERA Malvern, Worcestershire WR14 3PS, UK. E-maih c.m.ohalloran@pascal.dra.hmg.gb