In the Test plan IEEE 829 there are two categories, "Test Item" and "Features to be Tested" I tried to understand from format's description, but can someone please explain the difference.

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A test item is the system or software that is being tested. In a complex system, there may be multiple levels of components and sub-systems that are integrated and tested at various levels. Various Level Test Plans exist for each level of testing that occurs, and organizations frequently give these names like Component Test Plan or System Test Plan, perhaps naming the component or system under test. The test plan would clearly identify the test item. However, since testing occurs at multiple levels, not all features or functionality of a given software system may be tested at all levels.

For example, if your system is Microsoft Office, you may have multiple levels of test plans. One level could be the products that make up the suite, such as a Word Test Plan or a PowerPoint Test Plan. However, you would also want to test the integration points and overall product so you may also have a Office Test Plan. Word, for example, has a feature to embed a Excel spreadsheet in a Word Document - this feature may be called out as a "feature not tested" in your Word Test Plan, but a "feature to be tested" in your Office Test Plan, after both Word and Excel have been tested independently.

Another example of clearly identifying features to be tested and features not to be tested is in the case of performing validation of third-party software. When building safety-critical systems, you may have to perform validation of tools that have a risk of injecting defects or a risk of failing to detect defects. These third-party tools may have a lot of capabilities, features, and configurations, but you don't need to validate all of them. If you're following this test plan for validation, you would explicitly identify which features you would be validating (because you will be using them to support product development) and which features you won't be validating (because you won't be using them to support product development).

I'd also point out that IEEE 829-2008 was the last version of the standard was superseded by ISO/IEC/IEEE 29119-1-2013, ISO/IEC/IEEE 29119-2-2013, ISO/IEC/IEEE 29119-3-2013 and ISO/IEC/IEEE 29119-4-2015. The latest versions of these standards, as of the writing of this answer, are ISO/IEC/IEEE 29119-1:2022, ISO/IEC/IEEE 29119-2:2021, ISO/IEC/IEEE 29119-3:2021, ISO/IEC/IEEE 29119-4:2021, and ISO/IEC/IEEE 29119-5:2016. There are also additional technical reports in the ISO/IEC/IEEE 29119 family of standards that you may want to consider.

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