Apr 30, 2015 - Bus Factor Valuation

Probably most IT folks are familiar with the “bus factor” or “the lottery factor” if you prefer to think of good things happening to your coworkers. It’s the number of people who can get hit by a bus (or retire to a Carribean Island) before a project is doomed because no one knows how anything works.

The question is, what is a good bus factor? For really small projects it’s simply going to be 1 and that is just the way it is. Hiring two people who both have complete knowlege of one job is just too expensive and the project simply won’t happen. For a larger project, how do you know whether 3 or 5 or 10 is appropriate?

Enter the Bus Factor Valuation Formula:

actual value = desired value * (1 - 1/bus factor)

From a graph of that last term you can see that this is a pretty harsh function for small teams:

[Bus Factor Valuation graph] (https://www.desmos.com/calculator)

If only one person knows how everything works, your project is worth nothing. Even with 2 people knowing how your project works, your project is really only worth half of what you want it to be. Past 4 or 5 people the value flattens out fast. If you want to get more than 80% of what you think your project is worth, you need to start thinking about redundant teams, not redundant people.

I won’t make any statements about the fact that this equation imples every project is worth less than anyone thinks it is.

Here is my coworkers’ take on this idea:

Bus Factor Whiteboard