Recently I observed financial irrationality. A new project was projected to make a significant impact on financial performance for the organization. The IT group has a standard schedule and SLA for projects that it didn’t want to change, so IT wanted to delay implementation by a month.

The project had a projected impact of $50 million over a 8 months remaining in the fiscal year. A one month delay would mean missing $6.25 million of benefit. An experienced manager could even say that the marketing people were overly optimistic by an order of magnitude, and the total benefit was only $5 million. That still makes the cost of a one month delay $625,000.

It would be rational to spend at least half of that in overtime pay, incentives, and outside resources to get the project done without the delay. If that was done, the pessimistic expectation is that the organization would be ahead over $300,000, and perhaps up to $6 million if marketing is right.

There are real opportunities to be richer by being rational. Don’t let SLA’s make you poor.

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