The Cost of Delay

Cost of Delay

As a leader, do you normally look at the return on investment (ROI)?  Do you use it as a tool to make a decision or do you use it as a tool to determine if an investment had a positive outcome?

 

Most of us are effectively utilizing ROI as a measurement tool prior to and following our investment decisions.

 

I normally do too.  But there is also another very important metric tool to utilize – the cost of delay.

 

There is a famous Indian fable that tells a story of six blind men describing an elephant.  Each one thought he knew what it was: the tusks must be a spear, the tail must be rope, the rough feet must be a tree, etc.  Each felt he knew what he was touching based on their limited experience and perspective.  They did not get the whole truth because they did not seek to explore or try and get the whole picture.

 

It starts with asking the right questions.

 

So what is the cost of delay?  It is the understanding and communicating the impact of time against forecasted outcomes.  It provides the means to calculate and compare the cost of not completing or implementing something now, but rather making an informed strategic decision to complete or implement it at a later time.

 

In short – it’s where you need to ask what will cost us the most, doing it now or delaying its delivery.

 

First, start by associating a cost or ROI for each project, then determine the time it will take for each project, and then divide the time into money, which will provide the multiplier.  Once you have the multiplier, identify the delay of costs for each project at the very end of the time to identify the cost of delay.  Then look at the various sequence or projects and see the delay of costs for each one at the very end of the time to complete them all. (a detailed example is in the article, “Prioritizing to Minimize Cost of Delay” – referenced and linked below)

 

 

 

This is a short summary and baseline for calculating the cost of delay – an I Power Seed.  Please see additional resources below for a deeper dive. 

 

For those who have not utilized cost of delay I encourage you to try it, I think you will be surprised at the results.

 

For further research and understanding:

 

Prioritizing to Minimize Cost of Delay
https://www.leadingagile.com/2015/06/an-introduction-to-cost-of-delay/

 

Cost of delay: how to calculate quantitative cost of delay and CD3
https://smallbusinessprogramming.com/cost-of-delay-calculate-quantitative-cost-of-delay-cd3/

 

What is Cost of Delay?
http://blackswanfarming.com/cost-of-delay/

 

Calculating Cost of Delay for software projects
http://blog.plataformatec.com.br/2016/11/calculating-cost-of-delay-for-software-projects/

Leave a Comment

Recent Posts

Get The Latest Updates

Subscribe To Our Newsletter

No spam, notifications only about new posts and resource updates.

Popular Posts

Bright-Eyed and Bushy-Tailed!

Bright Eyed and Bushy-Tailed – Ken and Barbara: The Dynamic Duo of Chicken, Kindness, and Leadership   Let’s talk leadership. Grab your coffee or your Monster energy drink (or both

leadership-lighthouse-bulb

Leadership Thought

This thought was passed along to me to think and consider my efforts with those who resist change or something that I firmly believe in – continual service improvement.  

Ralph Waldo Emerson

Treat A Man As He Could Be

“Treat a man as he is, and he will remain as he is. Treat a man as he could be, and he will become what he should be.” Ralph Waldo

Management Is About Getting Things Done

Management is the art of getting things done through people.Mary Parker Follett   In simple terms, management is about getting things done through other people. Of course we know being

cultivating-culture

How You Made Them Feel

Why did I begin this journey? The main thought I had while completing my ITIL Practitioner Certification, there were so many frameworks, management, and leadership topics and thoughts and I