4Cost of Delay
Donald Reinertsen, in his book, The Principles of Product Development Flow, introduced the concept of “Cost of Delay (CoD)” in software development. It's a simple yet elegant concept. CoD is the loss in income if a project is delayed one month. He also showed that prioritizing projects by CoD divided by cycle time, which he refers to as “Weighted Shortest Job First” (WSJF), results in the lowest “Net CoD,” which is the cumulative cost of delay for a set of projects that must be prioritized because of development resource constraints.
For product managers, Net CoD is the same as opportunity cost. Opportunity cost is the profit or income lost by choosing one alternative over the other. Given two development projects P1 and P ...
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