MICs can sometimes be deferred or advanced without penalty
Last updated on July 7th, 2021 at 03:11 pm
A rehabilitated Green Line car of the Massachusetts Bay Transit Authority. Trolley cars still travel on surface streets in and around Boston, in medians of divided roadways. Many streets still contain buried trolley tracks. They comprise a technical debt. MICs continue to accrue due to a near-continuous need to patch roadways. The need arises because of surface decomposition from the freeze-thaw cycle and small movements of buried tracks under traffic loads. A recent sewer upgrade project in Cambridge required removal of buried tracks to replace an old sewer line. This presented an opportunity to defer street surface maintenance (MICs) to take advantage of the surface rebuilding that was included in the sewer project. I don’t know whether the city actually exploited that opportunity.
Although rescheduling financial interest payments is possible only by special arrangement, or in bankruptcy, we can often defer or advance MICs on technical debt by rescheduling work that might incur them. For some kinds of technical debt, MICs accumulate only if we perform engineering work that involves that debt. This property is especially useful when we plan to retire an asset that bears technical debt. When we remove the asset from service, the technical debt it carries vanishes.
For most conventional financial debts, interest charges accumulate until we retire the debt. Interest charges might be zero for some time periods, but they’re never negative. Failure to meet the contractual payment schedule can result in penalties and additional interest charges.
MICs are different from financial interest charges
For technical debt, we can sometimes defer or advance MICs without penalty. We can arrange to temporarily nullify the MICs on a particular class of technical debt, or particular instances of that class. To do so, we need only reschedule a project or projects. This is possible when MICs accrue only if there is a need to perform work on the assets that carry the debt. In a given fiscal period, if we perform no work on those assets, the MICs can be zero. By scheduling projects accordingly, we can arrange for MICs to be zero.
There is one caveat. As I mentioned in “Debt contagion: how technical debt can create more technical debt,” as long as a particular class of technical debt remains in place, its associated MPrin might increase. Deferring retirement of a class of technical debt can be wise only if we can control its associated MPrin or if changes in its MPrin are acceptable.
The Principal Principle is that a focus on the metaphorical principal of a technical debt can be your undoing. Focus on the metaphorical interest charges. Drive them to Zero and keep them there.
Misunderstandings about the metaphorical interest charges on technical debt are costly. They prevent us from exploiting the properties of technical debt that reduce carrying costs and retirement costs. And the misunderstandings arise from the fact that the technical debt metaphor is only a metaphor—technical debt and financial debt are different.
The metaphorical interest charges (MICs) and metaphorical principal (MPrin) of a particular class of technical debt can change as a result of retiring other seemingly unrelated classes of technical debt. In most cases, engineering expertise is required to determine technical debt retirement strategies that can exploit this property of technical debt.
Unlike financial debt, for technical debt there are no legally required reports or disclosures. We can sometimes estimate MICs, but most organizations don’t track the data necessary to estimate MICs with useful precision. Indeed, developing useful estimates is often technically impossible.
For financial debts, the interest charges associated with a unit of debt are (usually) the same for every unit of debt incurred under the same loan agreement. But for technical debt, the MICs associated with a given instance of a class of technical debt might differ substantially from any other instance of the same class of technical debt, even if those instances of technical debt were incurred at the same time as a result of a single decision or sequence of events.
The common understanding of interest on financial debts doesn’t correspond to the reality of technology-based systems, which are the targets of the technical debt metaphor. Formulating sound technical debt policy depends on understanding the nature of the difference between interest on financial debt and the metaphorical interest charges associated with technical debt.
