How to Measure Technical Debt

Or: An Executive’s Guide to the Cost of Software Architecture Shortcuts

In my experience, in any software project of sufficient complexity, it is necessary to cut corners in the software architecture. These shortcuts are decision that you make now so that you will be able to release your next version of the software that much earlier; these shortcuts are the result of not having enough time to do things “right”.

This is called your project’s Technical Debt.

Like financial debt, which is the metaphor used to explain it, technical debt happens when you “buy” more software features than you have resources (developers and time) for. Like financial debt, it accrues interest over time. And like financial debt, if you don’t pay it back, you may eventually get foreclosed and go bankrupt. That last part is not a metaphor. Your software project simply ends up costing more to maintain than the value you derive from it, and either the project or the company gets shut down, or both.

There are essentially two ways to deal with debt (technical, like financial):

1. You pay it all at once – This means that you do not “withdraw” any more features, until your debt has been fully paid. It has the benefit of being able to make a fresh start. It has the disadvantage of risking “starvation” while you try to pay the “bank”.
2. You pay it in installments – This means that you pay off your debt, a small part at a time, still “withdrawing” features, but less than you normally would, cutting down to essentials, for as long as you are still paying off the debt. It takes longer to finish, but you can still “eat” while paying.

Of course there’s the third option of continuing to withdraw as before, until you go broke, or luckily win the ‘lottery” (investment, buy-out, etc.)

There is no one clear way to deal with debt (financial or technical). It will depend on the situation, and the players. And most of all it will depend on the amount of debt.

Quantifying the Debt

With financial debt, it is easy to determine how much you owe. There’s the amount of money you borrowed, and the interest rate. Both are usually well known, and it is just a matter of keeping track of it, to make sure you can withstand it.

With technical debt, you still have the amount you borrowed, and the interest rate, but you usually don’t know the numbers.

Let’s start with figuring out the derived value of taking the loan. Whenever you demand that a feature or set of features be completed faster than it would normally take if the team were to maintain an appropriate quality level, you are “borrowing” from the architecture. Figure out how much time you saved, and multiply it by the hourly cost of the developers. That is the amount of money you borrowed from the architecture. Figure out what the reduction in the Time to Market will earn you, and that is the derived value of the loan.

The interest rate is not so easily calculated a-priori, but it can be estimated (with about as much accuracy as the development cost estimates your team makes – which may be good or bad; depends on your experience):

1. Map out the areas impacted by the shortcut
2. Estimate how much it would cost (developers x time) to develop a feature in the impacted areas, before the shortcut(s)
3. Now, estimate the cost to develop the same feature after introducing the technical debt

The difference in the cost is the interest you are paying. Keep track of the interest as it will change with every change you make to the system. A good practice is to calculate the interest every iteration or sprint. You should consider doing this as part of the sprint planning. This will have the added benefit of giving the product owner the opportunity to pay off some of the debt.

Note that like financial debt, the interest grows over time. The rate varies, and it is difficult to guess what it will be, except by projecting based on past experience. As you begin to accumulate this data, you will be able to make educated decisions on when you can afford to go into technical debt, and when you should avoid it. You should reassess your technical debt’s interest rate every sprint planning.

Armed with this knowledge, developers should now be able to collaborate with management in order to decide how to develop and whether or not it is okay to cut a corner on that next feature.

Finally, remember: Your architecture is a cold blooded loan shark, who will just as soon take your installments, as he will bust your project’s kneecaps over a missed payment.

What do you think? Do you have a preferred method of calculating / estimating technical debt, or a way to handle it?

Please share!

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