Financial and Production Metrics in Feature Driven Development (FDD)

FDD, or Feature Driven Development, is an Agile methodology that emphasizes predictability

and financial control. It utilizes specific financial and production metrics to track progress,
manage costs, and ensure on-time delivery. Here's a detailed breakdown to aid your studies:

Financial Metrics in FDD:

● Investment (I): Represents the total cost sunk into the project inventory, which in FDD terms
is the Feature List. This includes costs from pre-development activities, modeling, and
creating the feature list itself.
● Cost of Delay (CoD): Measures the financial penalty associated with not delivering a feature
on time. This could include lost revenue, customer dissatisfaction, or missed market
opportunities.
● Value to Cost Ratio: Compares the estimated value (financial benefit) of a feature to its
development cost. This helps prioritize features based on their potential return on investment
(ROI).

Production Metrics in FDD:

● Features: The fundamental unit of work in FDD. Each feature represents a well-defined
functionality or capability of the product.
● Feature Teams: Small, cross-functional teams responsible for designing, developing, and
testing a specific feature.
● Inventory: The total number of features in various stages within the project lifecycle,
including not started, in progress, and completed but not yet delivered.
● Throughput (T): The rate at which completed features are delivered to the customer,
measured in features per unit of time (e.g., weeks).

Key Concepts to Grasp:

● FDD aims to minimize Investment (I): By focusing on building high-value features first and
avoiding rework, FDD strives to keep development costs under control.
● Cost of Delay (CoD) drives prioritization: Features with a high CoD are prioritized to
mitigate potential financial losses from delays.
● Value to Cost Ratio guides feature selection: Features with a favorable value to cost ratio
are prioritized to maximize the return on investment.
● Inventory Management is crucial: FDD emphasizes managing the feature inventory
efficiently to avoid feature bloat and ensure timely delivery.
● Throughput (T) reflects project efficiency: Higher throughput indicates a faster delivery
rate of valuable features.

Additional Points to Consider:

● FDD utilizes a scheduling technique called "Parking Lot" to manage low-priority features or
those requiring further analysis. These features are temporarily set aside but can be revisited
later if needed.
● FDD uses burn rate concepts similar to other Agile methodologies, but with a focus on
feature completion rather than solely on cost burn rate.
By understanding and applying these financial and production metrics effectively, FDD teams
can achieve greater financial predictability, optimize resource allocation, and deliver features
that provide maximum value.

Further Study Resources:

● Book: "Agile Management for Software Engineering: Applying the Theory of Constraints for
Business Results" by Robert C. Martin (https://www.oreilly.com/library/view/agile-
management-for/0131424602/) (Chapter 21 & 24 cover FDD Production and Financial
Metrics in detail).
● Articles on Feature Driven Development (FDD) methodologies.

I hope this comprehensive explanation aids your understanding of Financial and Production
Metrics in FDD!