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This Focused Performance Weblog started life as a "business management blog" containing links and commentary related primarily to organizational effectiveness with a "Theory of Constraints" perspective, but is in the process of evolving towards primary content on interactive and mobile marketing. Think of it as about Focusing marketing messages for enhanced Performance. If you are on an archive page, current postings are found here.

Thursday, July 10, 2003

Cost and Schedule -- Glen Alleman recently wrote about cost and schedule growth in the Newgrange discussion list, referring to an...
...article in the current The Journal of the Defense Acquisition University, titled "The Relationship Between Cost Growth and Schedule Growth." The analysis of data shows there is no correlation between schedule growth and cost growth! "Knowing the length of the program is of no added value in predicting the cost, and knowing the cost is of no added value in predicting the length."
While this might be counterintuitive to some, I can see several rationales for a lack of linkage between cost and schedule, beyond the almost obvious one of projects that are material cost intensive...

First, "variable" people-oriented cost is related to the amount of work being performed. If resource constrained, the project might be required to do work in serial. I not, more opportunities for doing work in parallel might appear, thereby reducing project lead time without significant (or even any) increases in total project cost. There might be brief periods of higher cost in shorter time, but they are only the result of shifting cost and not adding it in significant amounts.

Second, in most project environments I have seen, there is also the noise of Parkinson's Law and similar "use it or lose it" budget pressures, that separate work (cost) time from schedule time. The noise that comes from such effects of management/cultural practice makes most data collection for such analyses suspect.

Third, and most important to such an analysis of cost, is the effect of multi-tasking within and across projects that is way too common in way too many project shops. In such environments, task and project duration has far more to do with how many times tasks are interrupted for other tasks than the actual work associated with the task at hand. This results in the need for careful reporting practices that divvy up the cost-hours but fail to clearly portray time-hours. (One reason for the use, in such environments, of something like EVM as an attempt to rationalize the two, although the noise factor of my second point can muddy those waters as well.)

However, without reading the piece that Glen points to, I'm going to assume that the focus on cost was the usual limited, shortsighted, navel-staring focus on delivery cost of projects and not the real, overwhelmingly significant cost associated with project duration -- the opportunity cost of delayed value associated with the cash register that rings with benefits at the end of the project. Since, if the project is worth doing, this lost value cost probably dwarfs the delivery cost in a dollar per day context, I would suspect that if it were taken into consideration, the results of any analysis that says cost is not related to duration would be different.

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