Are you letting sunk costs impact future decision making? In most cases, this isn't the best idea. Encyclopedia Britannica defines sunk costs as "a cost that has already been incurred and that cannot be recovered. In economic decision making, sunk costs are treated as bygone and are not taken into consideration when deciding whether to continue an investment project." This means that no matter the past time, money and resources invested in a process, tool, piece of equipment or project, we shouldn't hold onto them. This is obviously true when past decisions are losing money and is even true if a past decision is profitable but more profitable option becomes available.
In some cases, it can cost money to move on from past decisions with sunk costs. This investment should be viewed as justification to stay with thing as-is. This cost should simply be included with the current and future looking financial analysis.
In construction, a common scenario of getting stuck on sunk costs is when debating on whether to change a schedule or stop work (requiring a partial demobilization and mobilization) to avoid standby time or poor production while issues get figured out. If crews and equipment can be reassigned, even if it costs money to do so, it might be more cost effective on current and future costs to make it happen. It can be hard to temporarily reassign crews and resources and down right terrifying to shut down work completely. Developing a thorough financial analysis of the decision can ease stress and aid in explaining your decision up your chain of command, to subs and vendors, to architects and engineers, clients and more.
Debate around sunk costs and the best decision moving forward can be very challenging but when done right the decisions will build the best project possible and share in building a better world.
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