#delivery #product-management #priorities
idea
The cost of delay is the recurring value of the profit lost or the money spent on delaying a feature or project.
Arguably everything should be quantified on its impact to the life-cycle profit[2].
The interesting aspect of the cost of delay is that it helps evaluating optimizations (e.g. reducing debt, fixing bugs, …), additions (e.g. adding features), and improvements to the production capacity (e.g. improve process, tooling, diagnostics, etc.)
Cost of delay measures 5 sensibilities:
- Cycle time - decrease time needed to release product
- Product cost - decrease the cost of manufacturing for a product (seems to be less applicable to software than it is to hardware manufacturing)
- Product value - increase value that the product brings to its customer
- Development expense - decrease the cost of the product (e.g. engineering, marketing, etc.)
- Risk - reduce development and manufacturing risks
It is key to prioritizing the queues, measuring the cost of queues.
links
Cost of delay helps determining the impact of Batch size and wip
references
[1]: Principles of product flow
The Principle of Quantified Cost of Delay: If you only quantify one thing, quantify the cost of delay.
~ The Principles of Product Development Flow: Second Generation Lean Product Development, Donald G Reinertsen
[2]: Principles of product flow
The key idea is that product and project attributes that have economic value should be quantified using a standardized and useful unit of measure: life-cycle profit impact.
~ The Principles of Product Development Flow: Second Generation Lean Product Development, Donald G Reinertsen