Technical Debt Cost Calculator
Value technical debt as remediation cost and annual carrying cost.
What this calculator does
Principal and interest are valued at the organisation's own loaded rate from its own measured effort. The debt ratio is shown only when the build effort is entered; nothing is estimated on the user's behalf.
Inputs and what they mean
- Currency
- — Amounts are shown in the currency you pick. No exchange rate is applied..
- Hours to remediate the debt
- — The remediation effort your analysis recorded..
- Loaded cost per engineer hour
- — number value.
- Hours it took to build the system (optional)
- — Needed only for the debt ratio. Leave at 0 to skip it..
- Extra hours lost each month to the debt (optional)
- — Optional component. Leave at 0 to exclude it from the result..
How to use it
- Enter your own figures — the calculator never fills in a rate, price or benchmark for you.
- Press Calculate to see the result.
- Read the formula, variables, assumptions and source below the result before you rely on it.
Formula
Principal = Remediation hours × Loaded cost per hour; Technical debt ratio = Principal ÷ (Build hours × Loaded cost per hour); Annual interest = Extra hours lost per month × 12 × Loaded cost per hour
Worked example
1,800 hours of remediation on a 24,000 hour system
Remediation cost and the debt ratio, both from your own measured effort.
Reading the result
The headline figure is the main answer. Any breakdown underneath shows the parts that make it up, so you can check the working and see what changes when you adjust an input.
Limitations and assumptions
Results depend entirely on the figures you enter and are rounded for display. They are for general information and education, not professional advice.
Reference: Carnegie Mellon University, Software Engineering Institute — Technical debt — principal and interest
Last reviewed:
Common questions
Formula, source and verification
The principal is the cost of remediating the debt; the interest is the extra effort paid each year until it is remediated.
The question it answers: What would it cost to clear our technical debt, and what is it costing us to carry?
The formula
Principal = Remediation hours × Loaded cost per hour; Technical debt ratio = Principal ÷ (Build hours × Loaded cost per hour); Annual interest = Extra hours lost per month × 12 × Loaded cost per hour
- H_r — Hours to remediate the debt
- (h). Remediation effort recorded by the organisation's own analysis.
- r — Loaded cost per engineer hour
- (currency/h). Employer cost per engineer hour.
- H_d — Hours it took to build the system
- (h). Optional; needed only for the debt ratio.
- H_m — Extra hours lost each month to the debt
- (h). Optional; the measured interest.
Units: Hours; currency; percentage.
What kind of calculation this is
Deterministic formula. The same inputs always give the same answer. The maths is fixed and does not depend on judgement.
Method
Principal and interest are valued at the organisation's own loaded rate from its own measured effort. The debt ratio is shown only when the build effort is entered; nothing is estimated on the user's behalf.
Assumptions built into the result
- Industry: Remediation and build hours are measured on the same codebase and the same counting basis.
Figures this calculator will never guess for you
- No industry delivery rate, productivity figure, defect rate or cost per line is inserted.
- No optional component is filled in on the user's behalf.
- No default remediation rate, debt ratio threshold or interest rate is applied.
Limitations
- Only as good as the remediation estimate behind it.
- The debt ratio needs a comparable build-effort figure to mean anything.
Source and version
- Standard or reference
- Technical debt — principal and interest — Carnegie Mellon University, Software Engineering Institute (SEI, Technical Debt — the principal is the cost of remediating the debt; the interest is the extra effort paid on every change until it is remediated.)
- Published source
- Carnegie Mellon University, Software Engineering Institute — SEI research programme
- Formula version
- Version 1
- Verification
- Reviewed against the cited source on
- How much weight the source carries
- Academic
- Applies to
- Currency
- Amounts stay in the currency you choose; no exchange rate is applied.
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