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Technical Debt Management: A Complete Guide To Dealing With This Hidden Cost

Technical Debt Management is a term that has come up more and more in my conversations with Software Development teams. It’s a cost that the company is paying but doesn’t seem to have any visibility into the details of. The sad truth is, Technical Debt (also known as Project Debt) can be a hidden cost that prevents you from getting your product out the door or building new features that customers are asking for. Learn how to tackle this silent problem in this article.

What is Technical Debt?

Technical debt, also known as code debt, design debt, or software debt, is a metaphor for the eventual consequences of poor software development practices. It is often likened to financial debt: if technical debt is not repaid, it will continue to accrue interest, making the problem worse over time.

There are several causes of technical debt, but the most common is a trade-off between short-term gains and long-term benefits. For example, a decision might be made to use an inferior technology because it will get the job done more quickly in the short-term. However, this choice incurs technical debt because it creates additional work that must be done in the future to upgrade to a better technology.

Other causes of technical debt include poorly written code, undocumented code, and legacy code (code that was written for an older version of a technology). Technical debt can also be caused by external factors such as changes in business requirements or tight deadlines.

The consequences of technical debt can be significant. It can lead to decreased productivity, increased maintenance costs, and even project failure. In some cases, the only way to repay technical debt is to completely rewrite the affected codebase – a costly and time-consuming undertaking.

To avoid these negative outcomes, it’s important to proactively manage technical debt. This starts with understanding what technical debt is and how it can impact your organization. Once you have this knowledge, you can put processes and tools in place

Definition of Technical Debt

Technical debt is a metaphor used in software development that reflects the extra development work that needs to be done to incorporate new software features or fix defects.

When new software is developed, there is always a trade-off between taking the time to do things right and delivering new features to customers. This trade-off is sometimes referred to as “the cost of delay.” In order to deliver new features quickly, developers may take shortcuts or make other design choices that are less than ideal. These choices can create technical debt, which incurs interest charges (in the form of extra development work) over time.

If technical debt is not managed carefully, it can have a major impact on the long-term health of a software project. Unmanaged technical debt can lead to code rot, which makes it harder and more expensive to make changes to the code base over time. In extreme cases, unmanaged technical debt can even cause a project to fail completely.

Technical debt should not be confused with actual debt. Unlike actual debt, technical debt does not need to be repaid with cash. However, like actual debt, technical debt incurs interest charges that must be paid eventually if the project is to remain healthy in the long term.

Levels of Technical Debt

Technical debt is often described in terms of its severity or impact. Low severity debt has little impact on the organization, while high severity debt can grind operations to a halt. The first step in managing technical debt is to prioritize it based on its severity.

There are four levels of technical debt:

  1. Level 1: Debt that can be easily fixed with no impact on the organization

  2. Level 2: Debt that requires some effort to fix, but still has low impact on the organization

  3. Level 3: Debt that requires significant effort to fix and has moderate impact on the organization

  4. Level 4: Debt that is highly complex and impacts mission critical operations

The goal is to prioritize the repayment of technical debt based on its severity. Level 1 debt should be fixed as soon as possible, while level 4 debt may need to be addressed over a longer period of time.

Technical Debt Management Process

The technical debt management process consists of four steps:

  1. Identify technical debt

  2. Prioritize technical debt

  3. Repay technical debt

  4. Monitor technical debt levels

Identifying technical debt is the first step in the process. This can be done through code reviews, static analysis tools, or manual inspection. Once technical debt has been identified, it must be prioritized based on its severity.

Repaying technical debt can be done through a variety of means, such as refactoring code, rewriting components, or redesigning architecture. The goal is to reduce the amount of technical debt and make the system easier to maintain over time.

Monitoring technical debt levels is important to ensure that the amount of debt does not increase over time. This can be done through regular code reviews, static analysis tools, or manual inspection. By monitoring technical debt levels, organizations can ensure that they are always aware of their current debt situation and can take action to reduce it.

Failure to Address Technical Debt

When it comes to technical debt, the old adage “an ounce of prevention is worth a pound of cure” rings especially true. Failing to address technical debt early on can lead to a number of problems down the road, including decreased productivity, missed deadlines, and even project failure.

One of the biggest dangers of failing to address technical debt is that it can compound over time. As more and more code is added without addressing underlying issues, the problem grows larger and becomes more difficult (and expensive) to fix. This can lead to a vicious cycle in which developers are constantly playing catch-up, never quite able to get ahead of the curve.

It’s also important to note that technical debt is not always immediately apparent. In many cases, it can take weeks or months for the effects of poor design or inefficient code to become evident. By that point, it may be too late to do anything about it except scrap the entire project and start from scratch – something no one wants to have to do.

The bottom line is that technical debt should be taken seriously from day one of any project. Addressing it early on will save time, money, and headaches down the road.

Reduction of Technical Debt

Technical debt is one of the most common and costly problems faced by organizations today. It can have a serious impact on an organization’s bottom line, and can even lead to business failure.

Technical debt occurs when an organization fails to properly maintain its technical infrastructure. This can include failing to keep up with software updates, not properly testing new software releases, or not having adequate documentation. As a result, the organization accumulates what is known as “technical debt.”

Technical debt can have a number of negative consequences for an organization. It can reduce efficiency and effectiveness, increase costs, and lead to business disruptions. In extreme cases, it can even cause business failure.

Fortunately, there are a number of ways to manage and reduce technical debt. By understanding what technical debt is and how it can impact your organization, you can take steps to reduce its negative effects.

Mitigation Strategies for Technical Debt (Risk Management)

When it comes to managing technical debt, there are a few key strategies that can help mitigate the risks associated with this hidden cost. First and foremost, it’s important to have a clear understanding of what technical debt is and how it can impact your organization. Once you have a good handle on that, you can develop a strategy for dealing with it.

There are a few different ways to approach technical debt management. One common strategy is to establish a baseline level of technical debt that is acceptable for your organization. Once you have that baseline established, you can then put processes in place to ensure that new code doesn’t exceed that level. This can be done through code reviews, automated testing, and other quality assurance measures.

Another approach to managing technical debt is to create a dedicated team or department whose sole focus is on dealing with this issue. This team can be responsible for identifying areas of code with high levels of debt and working with the relevant teams to address those issues. This approach requires more upfront investment but can pay off in the long run by helping to avoid costly mistakes down the road.

Whatever approach you take to managing technical debt, it’s important to have a clear plan in place and make sure everyone on your team is aware of it. By taking these steps, you can help mitigate the risks associated with this hidden cost and keep your project on track for success.


Technical debt is a hidden cost that can quickly spiral out of control if it’s not managed properly. In this article, we’ve provided a complete guide to help you understand what technical debt is and how you can manage it effectively. We hope you find this information helpful and that it gives you the tools you need to successfully manage your technical debt. Thanks for reading!

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