Last updated on November 21st, 2017 at 09:05 am
The “principal” amount of a technical debt is not 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 the field of finance, the principal amount of a loan at the time of origination is the amount that was borrowed. Over time, as the debtor makes payments according to the terms of typical loan agreements, the principal either remains constant, in which case it’s repaid in a lump sum at a specified date, or it declines gradually, in increments, with each payment. This is the widely accepted layperson’s definition, and it’s the basis of the association people make with respect to the metaphorical principal amount of a technical debt.
That’s unfortunate. Because the metaphorical principal amounts of most technical debts behave very differently from the principal amounts of financial debts, using the term principal to refer to the metaphorical principal associated with a given kind of technical debt is risky. The risk arises from confusing financial principal, which is typically fixed or slowly declining, with the metaphorical principal of technical debt, which can exhibit sudden and dramatic fluctuations. These confusions arise because of unintended associations of the technical debt metaphor.
Using an alternative term that makes the metaphor obvious can limit this risk. One such term is metaphorical principal, or for convenience, MPrin.
Although the distinction between the initial principal amount of a technical debt and MPrin is not universally recognized [Seaman 2013], some have addressed it. For example, Avgeriou et al. define the initial principal of a particular class of technical debt as the savings realized by incurring the debt, and the current principal as the resources required to deploy a different or better solution now [Avgeriou 2016].
The initial principal concept of Avgeriou et al. is what we 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 or not to incur the debt, if, indeed, one has an opportunity to make such a decision. However, once the debt has been incurred, the current MPrin 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.