Cost of delay is central to decision making. It drives the right conversations and decisions around cost and revenue, rather than just the unbalanced conversations of cost many IT divisions suffer today. Cost of delay is the right tool for proper prioritization decision.

Lifetime Profitability

The cost of delay isn’t a simple calculation for most projects. Individual project deliverables have highly speculative and uncertain value propositions (until a customer pays, uptake rate is subjective). Also its speculation how any delay will cause competition to take more of your market share impeding lifetime value. Given its hard on a single project, calculating the compounding impact on other delayed projects in your portfolio (given your staff are still finishing this one) makes for a mind-blowing forecast equation for cost of delay. This is what we want to solve for you. Using the same models you use for planning and managing projects we build a consolidated picture of revenue and cashflow considering all aspects of cost of delay.

Our Cost of Delay Roadmap

The software industry is new to calculating cost of delay. Whilst we believe we are the leaders in this area (combining probabilistic forecasts for cost of delay calculations) it is an unpaved road we are travelling on. We are willing to put our plans on the table to show where we intend to be in the next few years and where we currently are –

Now: Linear lost revenue calculations plus cost of development

We implemented this in our KanbanSim and ScrumSim v1.3.1. We correctly calculate the lost revenue from a given target date. Revenue is modeled as a fixed value per unit of time (day,week,month,year). This simple calculation gives an accurate portrayal of lost immediate revenue but UNDERESTIMATES cost of delay by ignoring compounding impact on other projects and lost market share from being late.

2013: Compounding Dependent Projects

Dependent projects that are either pre-requisites or delayed by another project should add to the cost of delay calculations. We are beginning to model dependency trees in order to cascade cost of delays and the latest delivery forecasts into the cost of delay calculations. We feel that any portfolio planned without considering these cascading dependencies is flawed and looking forward to offering the first viable solution that helps muddle through the complexity of this planning process.

2013-2014: Lost product life-time profits (market share, competitive pressure losses)

How much would have google made (or Apple lost) if Google had Android on the market 12 months earlier? This is the type of analysis we are adding to our modeling language to obtain a more accurate picture of life time product harm by a delay. This is the holy grail of portfolio planning and prioritization and we are VERY excited to have the right groundwork to do this analysis with statistical rigor.

Next steps:

Register for training tutorial on the methods and techniques

Download the software and build your own models

Contact us for more information on consulting and on-site training