Thursday, May 27, 2010

Complexity and the marching army

Every project manager has an intuitive feel for the fact that cumulative fixed costs escalate with a slipping schedule. We in the industry call this the cost of the marching army.  Whether usefully engaged or not, they are on the project's charge number and their costs mount as the schedule slips. No news here.

Now, a little more thought about this leads in this direction: there actually are two cost densities to be concerned about.  One density is cost per unit of value delivered, dimensioned in cost dollars per dollar of value.  Some may want to call such a density a cost/value efficiency, and that's ok.

Another cost density is cost per unit of schedule duration, dimensioned in cost dollars per time unit.  This is the density that controls the marching army cost.
To get total cost in the project, we multiply each density by its units consumed or delivered. So far, just arithmetic.

What about interdependencies?  They usually add grief to any project.  Does one affect the other?  Peel the onion one more layer and you come to complexity as a driver on cost/value density, and to complexity as a driver on the number of schedule units to apply to the cost/schedule density.  Complexity creates the interdependency between fixed and variable costs.

How so?  Complexity itself is a matter of two primary elements: [1] the number of elements and the number of relationships between the elements, and [2] the feasibility of the elements.  The latter is going to drive special tools, skills, and practices in the cost/value density.  The former, because implementing relationships are such a cost driver, are going to drive the the number of schedule units for design, testing, and validation.

So, in a word: complexity!  That's the correlating element between the marching army and those that create value.

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