The whole discussion around the prototype we started last time fits neatly in the chain of the recent articles in this blog on cost escalation and risk management. Today we will look closer at how exactly a prototype helps you minimize the risk of cost escalation (and explosion) and what other benefits it brings you.
A prototype's first and most essential advantage is that it represents the lowest possible sunk cost. There are at least two levels here: On the objective level, the cost of the physical production of exactly one prototype is negligible compared to the project's total cost. This gives you the freedom to test out the solution while risking the minimal cost possible. At the same time and probably even more vitally so, the minimal sunk cost also means there is a minimized effect on the decision-making process: there is no need to convince oneself of the virtues of the prototyped solution if there are none. Thanks to low sunk costs, the prototype opens an opportunity for a marvelous “no strings attached”-attitude. One of the comments most frequent when talking about deficiencies of the prototype was “Well, this is exactly what we made it for”. Indeed, the prototype was created to be criticized, optimized and, if needed, reinvented. Having this in the back of your mind helps you be very pragmatic and emotionally detached while improving it after being very pragmatic when creating it. This gives the project team a safe and robust structure for constructive discussions. With this in mind, the prototype provided an excellent point of reference: “Now we see what we definitely DO NOT want to see as a part of the final solution”, and having this point of reference made the deduction of the end solution much more straightforward.
On top of that, there are a couple of other advantages related to the prototype that came on top: