Deadlines vs. Sad-Lines: Using Cost of Delay to Understand your Customer's Real Priorities
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This document discusses the concept of cost of delay and how it can be used to better understand a customer's priorities and optimize project scheduling. It defines cost of delay as the financial impact of waiting to complete a task or release a feature. It provides examples of how to estimate cost of delay both quantitatively by assigning monetary values to potential revenue gains, and qualitatively by analyzing language used in feature requests. Understanding cost of delay can help prioritize work to maximize value by focusing on the most time-sensitive tasks first. The document recommends using techniques like weighted shortest job first prioritization and limiting work in progress to balance queues and minimize delays.
Deadlines vs. Sad-Lines: Using Cost of Delay to Understand your Customer's Real Priorities
- 2. @jonathansen About Me Jonathan Hansen Thumbtack Technology NYC Kanban Meetup
- 3. @jonathansen Some Project Challenges • Delayed&Start& • Wrong&Thing&Started& • Premature&Op>miza>on Problems&that&Happen&Some>mes Root Cause: Misunderstood Cost of Delay
- 4. @jonathansen About Cost of Delay •What&it&is& •∩&Queues& •Using&it
- 12. @jonathansen Typical Project Start • Monthly&Release&Cycle& • Desired&Feature&List& • Budget:&$4000 “What&can&we&have&this&month?”
- 13. @jonathansen Estimated Delivery Costs Feature Story%Points T&M%Cost%($) 1 1 $500 2 3 $1500 3 3 $1500 4 10 $5000
- 14. @jonathansen Capacity + Budget Customer’s&Backlog Feature Story%Points T&M%Cost%($) 1 1 $500 2 3 $1500 3 3 $1500 4 10 $5000 Capacity: ≤8 points Below Budget: $3500
- 15. @jonathansen What About Cost of Delay? Customer’s&Backlog Feature Story%Points T&M%Cost% ($) Added% Revenue%per% month% ($) Value%aGer%6% months%($) 1 1 $500 $800 $4,300 2 3 $1500 $500 $1,500 3 3 $1500 $5,000 $28,500 4 10 $5000 $60,000 $355,000
- 16. @jonathansen Customer’s&Backlog Feature Story%Points T&M%Cost% ($) Added% Revenue%per% month% ($) Value%aGer%6% months%($) 1 1 $500 $800 $4,300 2 3 $1500 $500 $1,500 3 3 $1500 $5,000 $28,500 4 10 $5000 $60,000 $355,000 What About Cost of Delay? Actual Value: $33,880
- 17. @jonathansen Customer’s&Backlog Feature Story%Points T&M%Cost% ($) Added% Revenue%per% month% ($) Value%aGer%6% months%($) 1 1 $500 $800 $4,300 2 3 $1500 $500 $1,500 3 3 $1500 $5,000 $28,500 4 10 $5000 $60,000 $355,000 PotentialValue Wasted Actual Value: $33,880 Potential Value
- 18. @jonathansen About Cost of Delay •What&it&is& •∩&Queues& •Using&it
- 19. @jonathansen Tracking a Feature’s Costs CoD&for&“Feature&I” Worth&$20,000/week& once&released
- 20. @jonathansen Tracking a Feature’s Costs CoD&for&“Feature&I” Worth&$20,000/week& once&released Dev+QA&es>mate:&$4,000 Development&Costs
- 21. @jonathansen Tracking a Feature’s Costs CoD&for&“Feature&I” Week 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Value% Added Wait Idea& Captured Dev&&& QA UAT Deployed Sing&in& Backlog Wai>ng& for&UAT Wai>ng&for& Deployment
- 22. @jonathansen Tracking a Feature’s Costs CoD&for&“Feature&I” Week 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Value% Added Wait Idea& Captured Dev&&& QA UAT Deployed Sing&in& Backlog Wai>ng& for&UAT Wai>ng&for& Deployment $4,000&(development&cost) +&$260,000&(13&weeks&Opportunity&Cost) =&$264,000
- 23. @jonathansen Tracking a Feature’s Costs Drop&Everything&for&“Feature&I”?
- 24. @jonathansen Tracking a Feature’s Costs Drop&Everything&for&“Feature&I”? Everything&has&a& Different&Cost&of&Delay
- 25. @jonathansen About Cost of Delay •What&it&is& •∩&Queues& •Using&it
- 28. @jonathansen 1. Increase&Revenue& 2. Protect&Revenue& 3. Reduce&Costs& 4. Avoid&Costs Ways to Increase Value
- 29. @jonathansen Kinds of Cost • Development& • Opportunity
- 30. @jonathansen Prioritizing with CoD 1. CoD&already&known& 2. Quan>ta>ve&Es>ma>on& 3. Qualita>ve&Es>ma>on Depends&on&What&You&Have&to&Work&With
- 31. @jonathansen Prioritizing with Known CoD Weighted& Shortest&Job& First&(WSJF)
- 32. @jonathansen Weighted&Shortest&Job&First Project DuraQon Cost%of% Delay Weight%=% CoD%/% DuraQon 1 1 10 10 2 3 3 1 3 10 1 0.1 Prioritizing with Known CoD Source:%%The$Principles$of$Product$Development$Flow
- 33. @jonathansen Cost(of(Delay(($) Time High&Weight&First Project DuraQon Cost%of% Delay Weight%=% CoD%/% DuraQon 1 1 10 10 2 3 3 1 3 10 1 0.11 2 3 Weighted Shortest Job First Source:%%The$Principles$of$Product$Development$Flow
- 34. @jonathansen Low&Weight&First Cost(of(Delay(($) Time 1 2 3 Project DuraQon Cost%of% Delay Weight%=% CoD%/% DuraQon 1 1 10 10 2 3 3 1 3 10 1 0.1 By contrast, this is horrible Source:%%The$Principles$of$Product$Development$Flow
- 36. @jonathansen Sample Feature Value Card Title:&Replace(Sign>Up(Process(with(Google(Accounts(Integra/on What&kind(s)&of&value&is&this& feature&adding? ☑Add(Revenue& ☐Protect(Revenue ☑Lower(Costs( ☐Avoid(Costs About&how&much&value&do&you& think&this&will&add/month? ☐<($500( ☒$500(>($999( ☐$1,000(>($9,999 ☐$10,000(>($49,999( ☐$50,000(>($99,999( ☐>($100,000 How&will&it&add&those&kinds&of& Value? The$current$sign-up$system$is$slow$and$10%$ of$poten:al$users$abandon$the$process$3$ pages$into$it.$Signing$up$with$Google$ Accounts$will$take$fewer$than$3$clicks$and$is$ projected$to$reduce$abandonment$by$40%.$ Also,$we$will$no$longer$need$to$maintain$the$ old$sign-up$module. Complexity: 5$points Weight: 150 WSJF&again
- 38. @jonathansen Define Work Item Types Standard Expedite Fixed Date Intangible
- 41. @jonathansen Work Item: Standard Work Typical&Cost&of&Delay&Graph “It(is(becoming( increasingly& urgent(for(us( to(release(an( Android( version” CostofDelay($) Time
- 42. @jonathansen Work Item: Standard Work Trigger&Words “increasingly& urgent” “worth&$X& per&year” “recurring& savings” “compound& growth” “compe>>ve& advantage” “a&priority”
- 45. @jonathansen Work Item: Fixed Date Typical&Cost&of&Delay&Graph “The(founda/onal( API(for(our( Android(app(will( be(shut&down&on& March&15(so(we( need(to(replace(it( by(then.” CostofDelay($) Time
- 46. @jonathansen Work Item: Fixed Date Trigger&Words “on&November&15” “next&Friday” “Quarter&End” “seasonal&opportunity”
- 49. @jonathansen Work Item Types Standard Expedite Fixed Date Intangible
- 50. @jonathansen Use Kanban to Balance Work&in&Progress&Limits&by&Class&of&Service 3 2 2 1 1 1 1 1 1
- 52. @jonathansen Shameless Plug Next NYC Lean Coffee: Wednesday 7pm @ Spotify