Your SlideShare is downloading. ×
Estimating Cost of Delay
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×

Saving this for later?

Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime - even offline.

Text the download link to your phone

Standard text messaging rates apply

Estimating Cost of Delay

5,164
views

Published on

Estimating Cost of Delay presentation for Sydney Limited WIP Society

Estimating Cost of Delay presentation for Sydney Limited WIP Society

Published in: Business, Technology

0 Comments
5 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
5,164
On Slideshare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
111
Comments
0
Likes
5
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • \n
  • Transcript

    • 1. Estimating Cost of Delay Sydney Limited WIP Societyhttp://www.meetup.com/The-Sydney-Limited-WIP-Society/ Jason Yip @jchyip j.c.yip@computer.org http://jchyip.blogspot.com
    • 2. “Speed is not the objective,it is a means to an end; theobjective is making money.”
    • 3. Think of “money” as a proxy for what you define as value
    • 4. Split up into teams (5 min)• Introduce yourselves• Choose a “new” product idea including a rough idea of what it’s worth
    • 5. Simple Test (5 min)• Each member of your team, separately write down your answer: • What is the cost of delaying the project 3 months?
    • 6. What is the range of of the answers?• What do you think the range would be in your real-life teams?
    • 7. 4 key objectives
    • 8. Economic modeling process
    • 9. Develop Baseline Model
    • 10. Considerations for the baseline model• Pricing Trend• Market Size x Market Share = Unit Sales• Unit Sales x Unit Price = Dollar Sales• Unit Cost Trend• Project Operating Expenses: Development, Marketing (% of Sales), General & Administration (% of Sales)• (Cumulative) Profit Before Tax
    • 11. Copy and modify from the business plan!
    • 12. Ask for help from the Finance department
    • 13. Develop Variations
    • 14. What if...• Development expense overrun by 50%?• Unit cost overruns by 10% for 2 years?• Unit sales are overestimated by 10%?• Schedule is delayed by 6 months?
    • 15. Convert to Decision Rules
    • 16. Should we add an extra feature that will delaythe project by 2 months?
    • 17. Should we add a feature that will add $320k of value inexchange for delaying 2 months which will cost $1.4M?
    • 18. Tips on Modeling
    • 19. Accuracy is almost always controlled by theaccuracy of the input data
    • 20. Don’t bother with Net Present Value, Discounted Cash Flow, Internal Rate of Return, etc.
    • 21. “If people do not understanda model, they are less likely tolet it influence their behavior”
    • 22. The Simpler Version
    • 23. http://toolsforagile.com/blog/archives/647
    • 24. http://agileconsulting.blogspot.com/2011/03/using-cost-of-delay-functions-to.html
    • 25. 3 fundamental ideas• Quantify the cost of delay• Balance development speed against other objectives using decision rules• Ensure decision makers consistently use the decision rules
    • 26. Discuss