Technical Debt

I always wondered what it was called when bad decisions, bad programming or even the “we need this now” syndrome create a backlog of things that, sooner or later, will have to be fixed.  Well, it turns out that it is called “technical debt”.  Steve McConnell wrote about “Technical Debt” on his 10x Software Development blog.

McConnell distinguishes between the unintentional and the intentional.  Bad programming would be the first type.  The “we need this now” scenario falls under the second.  The willingness to cut corners in order to save the situation today may result in future rework (and, in my experience, almost always does).

Like credit, you will likely have long-term debt and short-term debt.  Also like credit, short-term debt needs to be paid off soon and frequently, while long-term debt might be years away from payoff.

When does it make sense to incur technical debt?  When the cost today is more than the cost in the future.  Often, financial debt is taken on when the rate of inflation creates cheaper dollars tomorrow.  If the interest rate is sufficiently low, then the debt can easily be justified.  McConnell argues that there also are circumstances in which technical debt makes sense.

McConnell’s financial comparisons don’t end there, either.  I think the most important point he makes is to not ignore technical debt and make it visible.  I can relate to this, as I know of one organization that made hiding inconvenient facts into an art form.  It always backfired, but it seemed the individuals involved kept doing it instead of learning from the experience.

I’m not going to regurgitate his entire article, which you can read here.  Since there are times it makes sense to take on technical debt, he also has a follow-up post, “Technical Debt Decision Making”, which is also a worthwhile read.  I really like how McConnell breaks down the costs in the follow-up article.

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Earned Value Management Now More Important Than Ever

Containing costs is a really big deal in this economy.  CEOs and CIOs are not likely to react favorably to unexpected project cost overruns.  Project managers (PMs)  do not want to get caught in this squeeze.  Early detection and mitigation are key factors in a project’s success.

As stated in the PM Hut article “Utilizing Earned Value Management During Economic Downturn”:

Utilizing EVM techniques does not prevent project costs overruns, but it does provide project managers with data for more effective cost and risk management, which has become increasingly important to corporations. Risks that are identified through the use of EVM provide early warning signals that immanent project risks exist.

~ Smith, Kevin.  (13 November 2008).  Utilizing Earned Value Management During Economic Downturn.  Retrieved 12 May 2009 from http://www.pmhut.com/utilizing-earned-value-management-during-economic-downturn.

While the article’s main premise is that company executives will (or will need to) pay more attention to EVM, I haven’t worked anywhere where that was a major problem.

What I find useful is to maintain 2 EVM calculations.  If you have a tool like CA Clarity, then it has a built-in EVM calculator that is rolled up into the various dashboards.  If you do not, then consider which EVM method you want to use to present to the world.  I would pick either percentage or 50-50 methods to present the most accurate data at that snapshot in time.  I would consider this my “tracking EVM” because it is the one being reported and the one everyone will be evaluating you on (officially or unofficially).

However, you, as the PM, need to know even before the rest of the world knows.  Therefore, I have always kept a 100% method EVM spreadsheet to update on a weekly basis to gauge when the project is even thinking about falling behind schedule.  Using this method, you are either late or not on a task.  There is no middle ground.  If you are even one day late, severe penalties are built into the calculations.  Then, you can dig in to find out what is going on underneath the calculations.

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