Is Time Equal to Money? Part 1
We’ve all heard the expression that time is money, but is it true? I don’t think so.
What does it truly mean? Does time equal money in my project?
If I lose time, I waste money? or If I delay, I get the money later?
If it’s the first definition, you are saying, money is like time. If I waste it, it’s gone forever.
If it’s the latter, you are saying that the delay causes a loss or missing opportunity (during the delay), never to be recovered.
Which is it?
As a practical matter, for a manager delivering a project or results, the main issues are waste and opportunity.
Is all time “wasted” truly lost? How do you know?
Most managers break their projects down into individual tasks with individual deadlines. Like this
Straightforward, isn’t it? Make a list of tasks, estimate durations, link them together and you have your sequence and completion dates. Day to day, your job is to keep those tasks completing on time. To deliver on time, meet all your dates. Don’t be late, each task is important, each resource is important.
The problem is that not all task sequences are the same. So, you manage the critical path; if you’re sophisticated, you’ll manage the critical chain. Certain sequences will dictate the overall duration of the project. You’ll give higher priority to one sequence over another.
Here’s the thing about time. By declaring one sequence of tasks more important than another, you are choosing some time to be more crucial than others. Losing time on a non-critical sequence is less important than on the critical sequence. Therefore, in some cases, time is not money. In other cases, time lost is a loss of a LOT of money; the value of the entire project!
During the life of a project, the manager makes tradeoffs between time now and time later. Completing the project delivers a certain value; the value of rental income for a building, the value of a new capability, the value of entering a new market, the value of a new feature, etc. Every project worth doing, is worth doing sooner.
When you’re the project manager, to make an educated decision, you must determine the value of a day. What’s a day worth? And, is the task on the critical chain (which is the shortest time to complete the project)? IF your task is on the critical chain your decisions could be very different than if your task decision is off the critical chain.
Time is Expensive?
You could argue that wasting time on the non-critical tasks costs money. Maybe.
Let’s pick a resource. Let’s say your engineer completes 2 tasks this week, but she can’t do more because she’s waiting for some information. The week before, she was much more productive, she completed 4 tasks. Does that mean that the week where 4 tasks were completed your expenses were lower? Your expenses change only when her pay changes. Only if she was paid less the week 2 tasks were completed. Time equals money only if the expense varies in direct proportion to the work delivered.
For most of us and for most resources, time lost does not equal money lost. People are not paid to produce work; they are paid to show up. The view of the enterprise is that expenses are a function of the number of people on the payroll, not the amount of work that is done. Payroll costs are fixed costs, not variable. Expenses are related to hiring decisions, not production. We can never say time = money when it relates to work, because expenses don’t vary with production. Time = money when look at how many people are on hire per day, week, month, etc.
So, time equals money, sometimes. Not all time is equal. Not all time is costly. Some time is worth a great deal. The cost of time is not the same as the value of time.
Most lost time is simply lost, because most resources are not on the critical chain. And that’s ok. Some lost time affects the critical chain and it’s not ok. What matters is the effect of lost time on the completion of the project, not the completion of an individual task.
The skilled manager must know the difference.