COMPEL Glossary / opportunity-cost
Opportunity Cost
Opportunity cost is the potential value lost by choosing one AI initiative over another when resources are limited.
What this means in practice
Every decision to fund one project means not funding alternatives, and portfolio leaders must consider both what they are doing and what they are choosing not to do. For organizations, understanding opportunity cost prevents over-investment in low-return projects when higher-value alternatives exist. In COMPEL, opportunity cost analysis is part of the portfolio investment optimization discipline in Module 4.1, Article 3.
Related Terms
Other glossary terms mentioned in this entry's definition and context.