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What is Cost of Delay?

Represents the economic impact of a delayed delivery over time.

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Definition

The Cost of Delay (CoD) represents the economic impact of a delay in the delivery of a product or service.

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Significance

It is a key metric in lean management and the kanban method for prioritizing work, reducing waste, and understanding the impact of delays.

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Purpose

To raise awareness of the financial impact of delays.

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Calculation

Involves estimating the weekly revenue that the delivery would generate and dividing it by the project's duration.

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Technique

CD3 is a technique that helps prioritize a backlog. It is calculated by dividing the Cost of Delay by the project duration to obtain the order of magnitude for ordering each PBI (Product Backlog Item).