Cost of Delay
Counterpoint: Late Start Benefits
Blogs:
Definition
Cost of Delay ignores Sunk Costs, includes all future costs and benefits, and is measured as a unit of value (e.g. £).
It is the difference between the value that would be available if a work item were completed immediately and the value if it were delayed.
Reality + Usage
In reality, it is rare to be able to calculate both the Value and Cost (and therefore also Cost of Delay), so we estimate them.
Teams can use Cost of Delay estimation to prioritise and schedule work items as part of WSJF priortisation.
There are a number of standard plots to Cost vs Time on a graph, here are some described with examples.
Expedite
Steep linearly increasing cost with no end in sight.
Example: Site is down.
Potential Course of Action: Expedite work to fix. Cost of Delay is huge.
Fixed Date
No cost (flat line) until fixed date in future when cost is realised, followed by another flat line.
Example: If we do not carry out work item X we will be fined £Y.
Potential Course of Action: Budget for work is less than £Y, start before the Last Responsible Moment.
Standard
Linearly increasing cost, turning into a dropoff curve associated with decline in product value over time.
Example: Product X is in demand by Y who are willing to spend £Z, demand declines over time as user needs evolve.
Potential Course of Action: Budget for work is appropriate to achieve good ROI compared to £Z.
Intangible
Mostly flat linear cost, but a possibility of an extreme cost in future.
Example: You have the capability to innovate new technology Y, you do not, a competitor releases Y which impacts your revenue.
Potential Course of Action: Prioritise an amount of R&D work.