Pay Now or Pay Later

To follow up on the fourth law, I add as reinforcement the fifth law of development physics: 

If you cannot pay for variability reduction, you will pay in one or more of the following ways:

1. Long iteration times and high story points in progress
2. Wasted capacity or need for more resources
3. Slower burn down rates

Of course, the other option is to accept poor quality, which has an entirely different set of costs.  Either way,  the variably in a development process has real costs if not addressed. 

This means that if you don’t use variation remediation techniques like those introduced in the forth law discussion, you will pay the consequences in one or more of the ways listed.  Knowing you have a quality problem, you may:

• Accept that it takes longer to produce the product
• Increase available resources to address inspection and rework needs
• Accept that less gets completed in each iteration

So, what is the cost of quality? Many will argue that if you want a quality process, you will pay more. This may be true if the alternative is accepting a low quality product (a Yugo.)  But, at the same quality levels, you will either pay early to reduce variability and build in quality or pay later through one or more of the fifth law impacts.  Given the second law of development physics, likely, the pay later route ultimately costs more. Or, to quote Deming, “Cutting costs without improvement of quality is futile.”

Credit: I continue to be in debt to Wallace Hopp’s and Mark Spearman’s great book Factory Physics, Foundations of Manufacturing Management, Mcgraw-Hill/Irwin, 1996. If you want to explore the math of these forth and fifth laws, see chapter 9, specifically 9.4.2 Analytic Insight.

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