Last updated on July 8th, 2021 at 11:47 am
The “metaphorical principal” amount of a technical debt isn’t like the principal amount of a financial debt. In fact, the two are so different that policymakers can make real trouble for their organizations if they fail to take the differences into account.In finance, the principal amount of a loan at the time of origination is the amount the creditor transfers to the debtor. Over time, as the debtor makes payments according to the terms of the loan agreement, the principal either remains constant or declines gradually. The terms of the loan agreement determine the actual remaining principal at any given time. This is the layperson’s definition. It’s the basis of the association people make with respect to the metaphorical principal amount of a technical debt.
Consequences of the layperson’s definition of debt
For technical debt management, the associations most people make with the debt concept are unfortunate. For example, using the term principal to refer to the metaphorical principal of a technical debt creates risk. The risk arises because the metaphorical principal behaves very differently from financial principal. Financial principal is typically constant or slowly declining. The metaphorical principal of technical debt can exhibit sudden and dramatic fluctuations. These confusions arise because of unintended associations of the technical debt metaphor.
Why I use the term MPrin instead of principal
We need a way to limit the risk of confusing the metaphorical principal of technical debt with the principal of a financial debt. The term metaphorical principal is so inconvenient that I prefer MPrin.
Most people don’t distinguish the initial principal amount of a technical debt and MPrin. But some have addressed it [Seaman 2013]. For example, Avgeriou et al. define the initial principal of a particular class of technical debt as the savings realized by incurring the debt [Avgeriou 2016]. They define the current principal as the resources required to deploy a different or better solution at the current time.
The initial principal concept of Avgeriou et al. is what I call in this blog the MPrin at the time the debt is incurred, or initial MPrin. Although the initial MPrin does have some value for decision makers at the time the debt is incurred, it’s most valuable when deciding whether to incur the debt, if, indeed, one has an opportunity to make such a decision. However, once the organization incurs the debt, the current MPrin at debt retirement time is what matters; initial MPrin becomes irrelevant.
Policymakers must keep clearly in mind that the MPrin of a given kind of technical debt is the total cost of retiring that debt, at the time it is retired, including all cost sources.
We’ll have a look at the policy implications of the properties of MPrin next time.
Available: here; Retrieved: March 10, 2017.
Defines technical debt as the gap between just making it work and doing it right. This is the initial principal approach to the definition. Considers known defects not fixed to be technical debt.