Is Time Equal to Money? Part 1

We’ve all heard the saying 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, do I waste money? Or if I delay, do I get the money later?

If it’s the first definition, you are saying that 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 a missed opportunity (during the delay) that is never recovered.

Which is it?

As a practical matter, for a manager delivering a project or results, the key issues are waste and opportunity.

Is all time “wasted” truly lost? How can you know that?

Managing Time

Most managers break their projects into individual tasks with individual deadlines.

Make a list of tasks, estimate their durations, and link them together; you have your sequence and completion dates. Day-to-day, your job is to keep those tasks on track. To deliver on time, meet all your dates. Don’t be late. Each task is important, and each resource is important.

Opportunity Time

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 project’s overall duration. You’ll give higher priority to one sequence over another.

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 losing time 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!

Throughout a project's lifespan, the manager balances tradeoffs between immediate and future time. Completing the project provides specific value, such as rental income from a building, new capabilities, market entry, or additional features. Any worthwhile project is best completed sooner.

When you’re the project manager, to make an informed decision, you must determine the value of a day. What’s a day worth? And is the task on the critical chain (the shortest path to complete the project)? If your task is on the critical chain, your decisions could be very different from if your task is off the critical chain.

Is Time Expensive?

You could argue that wasting time on 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 information. The week before, she was much more productive and completed 4 tasks. Does that mean your expenses were lower the week 4 tasks were completed? 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 directly with the work delivered.

For most of us and most resources, time lost does not equal money lost. People are not paid to produce work; they are paid to show up. The enterprise’s view is that expenses are a function of the number of people on the payroll, not the amount of work done. Payroll costs are fixed, not variable. Expenses are tied to hiring decisions, not to production. We can never say time = money when it comes to work, because expenses don’t vary with production. Time = money when we 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 its value.

Most lost time is simply lost because most resources are not on the critical chain. And that’s okay. Some lost time affects the critical chain, and that’s not okay. 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.