Cost of Delay (CoD) describes the economic damage or lost opportunity that occurs when a feature, enabler, or project is delivered later than possible. The concept originates from product development (Don Reinertsen, The Principles of Product Development Flow) and is a core prioritization criterion in SAFe.
CoD combines two dimensions:
1. Value (business value, user benefit, risk reduction, compliance)
2. Time (how quickly value erodes or costs rise when delivery is delayed)
Practical Relevance
In SAFe, CoD is the basis for the Weighted Shortest Job First (WSJF) prioritization model:
WSJF = \frac{Cost\ of\ Delay}{Job\ Size}
This ensures that work with high value, high time criticality, and relatively small size is prioritized first.
SAFe typically breaks CoD into three components:
- User-Business Value
- Time Criticality
- Risk Reduction / Opportunity Enablement
Relevance for Organizations
- Value focus instead of utilization: Work is chosen for impact, not to keep people busy.
- Shared language between Business & IT: CoD makes prioritization discussions fact-based.
- Avoiding opportunity costs: Late value delivery often costs more than project expenses.
Real-World Examples
E-Commerce – Mobile Payment Feature
- Context: An online retailer planned to introduce Apple Pay. Marketing estimated a 5% checkout conversion increase worth ~€10M annually.
- CoD Calculation: Each week of delay meant ~€200K lost revenue.
- Decision: The payment feature was prioritized over an internal reporting tool due to its higher CoD.
- Impact: Launched within the PI, conversion improved as expected, opportunity cost avoided.
Telecommunications – World Cup Tariff Model
- Context: A carrier developed a special “World Cup data package.” Market window: 3 months. Delay meant ~100,000 lost new customers per month.
- CoD Evaluation: Time criticality extremely high – after the tournament, value drops to zero.
- Decision: Resources were shifted despite incomplete billing modernization.
- Impact: Product launched on time, added hundreds of thousands of customers, boosted market share.
Manufacturing – Test Automation Enabler
- Context: A manufacturer faced 8–10 week integration cycles with costly late defect discovery.
- CoD Evaluation: Each week without automation created ~€50K extra downstream costs. Immediate revenue: none.
- Decision: Test automation prioritized over new features.
- Impact: Test cycles reduced to 2 weeks, quality increased, downstream costs fell significantly.
Practical Implementation
1. Preparation & Roles
– Business Owners assess business value and urgency.
– Product Managers/Owners define features clearly.
– Architects/Enablers provide risk and dependency input.
– Teams size the work (Job Size).
– RTE facilitates; SPCs support as coaches.
2. Define CoD Components
– User-Business Value
– Time Criticality
– Risk Reduction / Opportunity Enablement
→ Rated on relative scales (1–10).
3. Collaborative Estimation
– Cross-functional discussions avoid bias.
– CoD is ranked relative to other items, not in absolute money.
4. Estimate Job Size
– Teams use story points or T-shirt sizes.
– Focus on relative consistency, not exactness.
5. Calculate WSJF
– CoD / Job Size → produces a prioritization ranking.
– Highlights small but valuable items.
6. Use in Decision Forums
– PI Planning: Teams and Business Owners prioritize together.
– Portfolio Sync/LPM: Epics and initiatives prioritized using CoD.
Tools & Aids
– Portfolio Kanban systems (Jira Align, Rally).
– Moderated WSJF workshops.
– Heatmaps or bubble charts for visualization.
Best Practices
– Reassess every PI or after market shifts.
– The conversation matters more than the number.
– Include enablers explicitly, not just features.
– Document why items were prioritized.
Pitfalls
– False precision with financial figures.
– Political battles without shared scales.
– Underestimating enablers and risks.
– Treating CoD as one-off instead of recurring.
CALADE Perspective
Too often, prioritization follows gut feeling or hierarchy. CoD brings economic clarity. At CALADE, we stress practical estimation over false precision and embed CoD in recurring decision-making routines. The goal: fact-based, transparent, and fast prioritization.
Related Terms
- Weighted Shortest Job First (WSJF)
- Portfolio Kanban
- Business Owner
- PI Planning
- Enabler
- Opportunity Cost
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