French Caldwell

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French Caldwell
VP and Gartner Fellow
15 years at Gartner
19 years IT industry

French Caldwell is a vice president and Gartner Fellow in Gartner Research, where he leads governance, risk and compliance research. Mr. Caldwell also writes and presents on knowledge management. His research includes analysis of the impact… Read Full Bio

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Don’t Let Sunk Costs Sink You

by French Caldwell  |  February 19, 2009  |  1 Comment

One risk that IT and business leaders have a hard time with intellectually is rationalizing sunk costs for a project that in a recession they never would have started in the first place.  “We’ve spent all this money — we can’t just throw it away.”

Oh, yes you can!

You gotta throw it away before the project sinks you and everyone else — even if after the recession it means spending more money, re-engaging the consultants at higher rates, and hiring new people all over again.

There may be ways to minimize the costs of resurrecting a project later — mothballing as it were — but it costs money to mothball.  In an extreme downturn you may just have to let that important project rot at the pier.

Sunk costs.  Don’t lose sleep over ‘em.

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1 response so far ↓

  • 1 Eric Knipp   February 26, 2009 at 11:16 am

    Thanks French. Short and sweet. And you point out something that we all suffer from, not just business and IT leaders. Dealing with sunk costs is a serious issue in our professional and personal lives that we all have to deal with.