Pedro Arantes
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Cost of Delay

Cost of delay (COD) determines the financial impact on the company if it releases a product on the market earlier or later. When a product arrives on the market X months earlier, revenues also roll in X months earlier.
#cost-of-delay
Zettelkasten, April 07, 2022
## Notes - [Flow principle E3 states](/books/the-principles-of-product-development-flow#e3-the-principle-of-quantified-cost-of-delay-if-you-only-quantify-one-thing-quantify-the-cost-of-delay)—_"If you only quantify one thing, quantify the cost of delay."_ - Cost of delay (COD) determines the financial impact on the company if it releases a product on the market earlier or later. When a product arrives on the market X months earlier, revenues also roll in X months earlier. - The figure below shows the economic impact of a prioritization sequence. Considering each feature takes 3 weeks to finish and generates \$10,000 once released, the second scenario generates \$60,000 ($$40,000 from A and \$20,000 from B) for the company. ![Prioritization sequence has an economic impact.](/images/originals/cost-of-delay-sequence.png) - COD is the more eye-opening measurement that a company can infer because if you can't quantify the cost of a queue on the [critical path](z/critical-path), you can't quantify the benefit of reducing it. - You can evaluate the following costs using COD: - the cost of queues - the value of excess capacity - the value of variability reduction - the benefit of smaller batch sizes. ## Tweet https://twitter.com/arantespp/status/1511752951915692033 ## References - [The Principles of Product Development Flow](/books/the-principles-of-product-development-flow) - [Rethinking Agile](/rethinking-agile)
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