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If the work in a project complies with all Guidance (aka is Compliant) then we have no problems. If not and some work does not comply with some Guidance (aka is Non-Compliant) then a Transformation Debt™ Agreement (TDA) is created. The TDA details three things:

¨      Cost of Compliance - What is preventing the project from complying with the guidance and what does the project need to be given to allow the project to comply and therefore convert the work from Non-Compliant to Compliant.

¨      Cost of Non-Compliance - What issues and risks going forward will this Non-Compliance create for the Enterprise.

¨      Cost of Remediation - What will it cost the Enterprise to become Compliant in the future (assuming the project is not allowed to do what is required now to become Compliant).

In simple terms:

¨      The Cost of Compliance - What will it cost the project to do the right things now.

If the project is not granted the Cost of Compliance:

¨      The Cost of Non-Compliance - What pain will the Enterprise have to endure going forward, until we incur

¨      The Cost of Remediation - What will it cost the Enterprise later to fix it.

But why is it called an “Agreement” rather than an “Assessment” or “Waiver” or something else?

Originally Pragmatic call it a “Waiver”, but that word did not truly reflect what it was. The reason we call it a Transformation Debt™ Agreement, is because it really is an agreement! An agreement by management that they agree to provide the resources required to satisfy the guidance, or that they agree to accept the recurring cost of non-compliance and potentially the future cost of remediation. Another way to think about it, since it is possibly incurring debt, it is similar to a loan agreement, where you detail the loan amount, what the interest is, and what it will cost to pay off the loan in the future.

 

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Questions to ponder...

When projects currently do not comply with guidance, what happens?

Do projects document the Cost of Compliance, Non-Compliance and Remediation?

Does Management agree to provide what is required or accept the consequences of not doing so?

If not, what effect does that have on executing projects?






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