Understanding Sunk Costs

James Robertson had quote on how often huge failed projects continue under their own momentum:

“A week after the primary election was plagued by human error and technical glitches, Maryland Gov. Robert L. Ehrlich Jr. (R) called yesterday for the state to scrap its $106 million electronic voting apparatus and revert to a paper ballot system for the November election. “When in doubt, go paper, go low-tech,” he said.”

On the other hand, the legislature is in the classic IT management “We spent all this money!” mode:

“We paid millions. These are state-of-the-art machines,” said Miller, who called Ehrlich’s announcement a political ploy to energize his Republican supporters.”

Sigh. Politics, IT – there’s very little difference. After enough money gets spent, no one is willing to admit just how bad things are. Better to just go along, and pretend it’s all fine.

No one likes to admit they made a mistake, especially a multi-million dollar mistake. Thus we have instances like this.

The crucial mistake is not understanding sunk costs. Once you’ve spent the money it’s just gone. If the project you’re running produces no software or badly broken software then yes you’ve wasted the money. The brave thing to do is admit things have gone badly wrong and start over. Far too often we just soldier on wasting millions more until finally someone points out that the emperor has no clothes and cuts off the funding. It’s how we get so many classic death march projects.

And on a related point I worked on an electronic voting project for a county government about 9 years ago. There were some minor bumps when they were first rolled out, but we always had a paper receipt. I’m still shocked that they started producing machines that didn’t have some sort of hard copy. And before that we had classic punch card voting. Hanging chad was a well known occurrence because there were always a few mainframe developers who were paid overtime to sort through the rejected punch cards.