Costs Associated with Technical Debt

When comparing the two projects above, we could have also focused on other metrices like cost of change. We would see the inverse of the curves above: a project with well-managed technical debt will have low cost to change in later stages, while a project with poor technical debt management will have high cost to change.

These costs are often hidden, and don't manifest directly as measurable lost dollars for an organization.

Fiscal cost

The fiscal cost of a change is the direct monetary cost of the change. With software, this mostly means the cost of the labor to implement the change. Developers and other technical staff must be paid to fix issues.

Opportunity cost

Time spent fixing issues is time that is not spent on new features or improvements. This can lead to a backlog of work, which can lead to longer development cycles and lower productivity.

Psychological cost

Developers who spend most of their time fixing issues are more likely to be burnt out and unsatisfied with their work. This can lead to higher turnover and lower morale.

Reputational cost

Software providers with a reputation for rolling out software that is littered with bugs, or for being unable to deliver promised features on time, are more likely to lose customers.