Nigel Thorne
ResourcesTalk to Nigel

Resources / Delivery decisions

Cost of Delay.

What value do we expect to lose if this outcome arrives later?

That is the question Cost of Delay helps you answer. It makes the price of waiting visible alongside the price of doing the work.

How do I calculate it? →

Value and urgency belong together.

Value

What improves when we deliver? More sales, fewer losses, less spending or a better outcome for the people we serve.

Urgency

How does that opportunity change with time? Can it wait, does it shrink, or is there a deadline after which it disappears?

A large opportunity is not automatically urgent. A smaller opportunity may need attention now because the window is closing.

A rate, then a running total.

Cost of Delay is usually expressed as money per week or per month. Total delay cost is the value lost over the whole period of waiting.

Cost of DelayAUD 1,000per week
Waiting time4 weeksof delayed benefit
Total delay costAUD 4,000estimated value lost
Illustrative example. The weekly loss stays constant here. Four weeks of delay at AUD 1,000 per week adds up to AUD 4,000.

This is a steady-rate example, not a universal formula. If the rate changes over time, add up the losses across the affected periods instead.

Use it to make a decision.

Reduce waiting

A finished change sitting in a release queue has not delivered its benefit. Include approvals, hand-offs, rollout and adoption when looking for delay.

Compare speed with price

In the example above, avoiding two weeks of delay is worth AUD 2,000. Paying AUD 1,500 to achieve that could make sense if quality and risk are unchanged.

Deliver a useful part sooner

A smaller release can start producing value while the rest is still being built. Estimate the benefit of that slice, not the full project.

Choose what comes next

Compare opportunities using the same time unit and economic basis. Account for dependencies and the time each one occupies a constrained team.

Where does CD3 fit?

CD3 divides Cost of Delay by duration. For independent pieces of work competing for the same capacity, it can favour short, valuable work over a long job with a higher weekly Cost of Delay. Treat it as a scheduling aid, not a universal ranking: deadlines, dependencies, uncertainty and changing rates can alter the decision.

Make room for learning.

Black Swan Farming also describes innovation as a search where a few successes can account for much of the return. You cannot know those winners in advance.

Small experiments, limited work in progress and early feedback help you test the assumptions behind an estimate. A quick experiment may be worth doing because it changes a bigger decision, even when its direct revenue is small.

An estimate should invite questions. Keep the evidence and uncertainty visible, then update it as you learn. Do not use a dollar figure to override safety, legal duties or outcomes that money does not capture well.

But how do I calculate it?

Start with a measurable change, estimate the benefit per week, then ask what a later delivery would do to it.

See the worked example →

Sources and further reading

This is an original introduction informed by Black Swan Farming. The numbers and diagrams here are illustrative, not reported client results.