What is the opportunity cost of choosing to research the meaning of opportunity cost over riding my exercise bicycle, assuming I can't do both at the same time?
That and other intriguing questions that have been raised during the process of reviewing the article "What Is Opportunity Cost and Why Do You Need to Understand It" by Cornelius Fichtner have resulted in small windows of success, but also more unanswered questions.
Mathematically speaking, Opportunity Cost is easily calculated IF you know the value of your choice and the value of your second choice. The challenge comes in assigning cost ... or value, depending on how you look at it. After reading the article, I was struggling with exactly how this related to project management. The first stop in my search for the connection revealed that the term was introduced by Austrian economist Friedrich von Wieser in the early 1900s. Aha! My son is majoring in Economic with a focus on the Austrian School. I'll just call him and he will reveal the mystery and make all things clear. Fifteen minutes into the conversation and I'm still asking him, so how does this help me decide between two projects?
I'd like to say that I hung up the phone, decided to sleep on it and I was enlightened in a dream that answered all my questions. Didn't happen, but there is a wealth of information I discovered that subsequently did fill in some of the gaps. Opportunity Cost can help with your risk management plan, strategic planning and yes, choosing one project over another.
If your curiosity is piqued, read the article, but keep reading other sources and you'll gain deeper insight into a deceptively simple comparison.
With best regards.