Sunk Costs

I was reading a book recently (Rework) and there was a chapter in there about assessing the relevance and impact of the things you work on. I had heard this before, but hadn’t thought about it in some time. I have a few projects underway, and I should assess if they are still worth it.

The basic idea is that whatever you’ve done, whatever resources you’ve invested (time or money), are gone. It isn’t relevant for trying to decide if you should continue. If you continue on because you’ve invested in the project, it’s ego. It’s saving face, and not necessarily productive.

I first heard about this during the Cold War. There was a defense contractor that invested $20million in some weapon. However they reached a point where it wasn’t working and there was some concern if the military would buy it. One engineer wanted to scrap the project and start over with a new idea. There were others that said since $20million was invested, they needed to continue.

Someone in management finally said that the $20million was irrelevant in the decision. That money was gone whether they continued on or started over. The question was what is the best decision now.

It’s easy to get invested in a project, either emotionally, or because of the money. It’s also easy to let that investment drive you, rather than re-assessing your current situation.

Don’t consider the sunk costs. Don’t consider anything as being thrown away. If a project needs to be scrapped, take away a learning experience, however expensive, and move on. Do your best not to get trapped by previous bad decisions and make the best decision for this point in time. If you can reuse things do that, but don’t force yourself to reuse things because you invested in them.