Unlocking Agile's Missed Potential

Appendix AGeneral Cost of Delay Formula

Cost of Delay can be calculated in the case where the cumulative income curves can be represented as functions of time.

Consider the cumulative income curves of Investments 1–3 represented by f₁(t), f₂(t), f₃(t) with cycle times T₁, T₂, T₃, respectively, where f₁(t) = 15t, f₂(t) = 10t^1.5, and f₃(t) = 8t^1.8. Time units are in quarters, income in $K. Figure A.1 shows the development order f₁(t), f₂(t), f₃(t).

f₂(t) is delayed by T₁ while Investment 1 is developed. The deferred income from f₂(t) is what would have been produced by f₂(t) when the first Investment was completed, which is f₂(T₁).  f₃(t) is delayed by T₁ + T₂ by the development of Investments 1 and 2. By time T₂ Investment 3 could have generated ...