Cost of delay

Short definition

The value of what an organization loses while a decision or a delivery is pushed back: a commercial opportunity, learning not achieved, coordination energy, a market window, accumulated confusion.

Full definition

In the product-development tradition the term comes from — lean and flow prioritization methods — it designates a quantified magnitude, often expressed in currency per unit of time, and intended to order a portfolio of work. Most prioritization formulas that use it treat it as an input to be estimated.

In the articles on this blog, the term is retained for its function of revelation rather than for its numerical value. It serves to give existence to a cost that never takes the form of an immediate expense, and thus to make apparent that pushing back an arbitration is already a choice with a price.

Field usage departs from the definition on one point: the figure is almost always rough, and its imprecision is accepted. What counts is that a question be asked in session — what are we losing by not deciding now? — not that the amount be defensible.

Usage in the field

The term comes into play in prioritizing a portfolio, in arbitrations deferred in committee, in requests for further analysis, and in evaluating a market window.

Synonyms and variants

"Cost of delay", "cost of waiting". The question that stands in for it without naming it: "what does waiting cost us?"

Not to be confused with

• Coordination cost — the continuous expense in meetings, follow-ups and cross-validations required to hold together a line that was never settled; it is one of the forms the cost of delay takes, not its equivalent.
• Technical debt — the cumulative degradation of a system through deferred implementation choices; it is paid in construction, where the cost of delay is paid in passing time.
• Opportunity cost — the value of the best option not retained; it compares two choices, where the cost of delay puts a number on the absence of a choice.
• Arbitration — Arbitration — a choice that names the priority and the loss; the cost of delay is the price of deferring it.

Examples

"Delay can cost in commercial opportunity, in learning not achieved, in coordination energy, in a missed market window, in accumulated confusion." — the extent of what the term covers here.

"It simply forces a question that soft decisions often avoid: what are we losing by not deciding now?" — the usage in the sense retained here.

Ambiguities / debates

The word "cost" suggests a measurement, and that is what makes it manipulable: a figure displayed with assurance can force a premature decision on a genuinely uncertain subject. The sense retained here accepts the imprecision rather than masking it.

Unsettled: the perimeter. Some usages limit the term to lost commercial revenue, others include internal fatigue and confusion, which aren't quantified the same way.