One of the first project management concepts that I learned was the Time, Cost, Scope, also known as the Iron Triangle. The triangle demonstrates that quality cost and time are interrelated. Any project is expected to finish at time cost and scope. We manage it in a way that we get maximum quality for same. If we change any side of this triangle, other side will also get impacted. If we fasten the progress (time) we may have to spend more (cost) or achieve lesser work completion (scope). In this way rather, something is fixed and we change it.
For example, a project can be completed faster by increasing cost or reducing scope. Similarly, increasing scope may require equivalent increases in cost and time. Cutting cost without adjusting time or scope will lead to lower quality.
The time constraint refers to the amount of time available to complete a project. The cost constraint refers to the budgeted amount available for the project. The scope constraint refers to what must be done to produce the project’s end result. These three constraints are often competing constraints: increased scope typically means increased time and increased cost, a tight time constraint could mean increased costs and reduced scope, and a tight budget could mean increased time and reduced scope. The discipline of project management is about providing the tools and techniques that enable the project team to organize their work to meet these constraints. Another approach to project management is to consider the three constraints as finance, time and human resources. If you need to finish a job in a shorter time, you can throw more people at the problem, which in turn will raise the cost of the project, unless by doing this task quicker we will reduce costs elsewhere in the project by an equal amount. The real value of the project triangle is to show the complexity that is present in any project. The plane area of the triangle represents the near infinite variations of priorities that could exist between the three competing values. By acknowledging the limitless variety, possible within the triangle, using this graphic aid can facilitate better project decisions and planning and ensure alignment among team members and the project owners.
For analytical purposes, the time required to produce a deliverable is estimated using several techniques. One method is to identify tasks needed to produce the deliverables documented in a work breakdown structure or WBS. The work effort for each task is estimated and those estimates are rolled up into the final deliverable estimate. The tasks are also prioritized, dependencies between tasks are identified, and this information is documented in a project schedule. Time is different from all other resources and cost categories. Using actual cost of previous, similar projects as the basis for estimating the cost of current project.
According to the Project Management Body of Knowledge (PMBOK) the Project Time Management processes include:
- Plan Schedule Management
- Define Activities
- Sequence Activities
- Estimate Activity Resources
- Estimate Activity Durations
- Develop Schedule
- Control Schedule
To develop an approximation of a project cost depends on several variables including: resources, work packages such as labour rates and mitigating or controlling influencing factors that create cost variances. Tools used in cost are, risk management, cost contingency, cost escalation, and indirect costs . But beyond this basic accounting approach to fixed and variable costs, the economic cost that must be considered includes worker skill and productivity which is calculated using various project cost estimate tools. This is important when companies hire temporary or contract employees or outsource work.
- Cost Estimating is an approximation of the cost of all resources needed to complete activities.
- Cost budgeting aggregating the estimated costs of resources, work packages and activities to establish a cost baseline.
- Cost Control – factors that create cost fluctuation and variance can be influenced and controlled using various cost management tools.
Requirements specified to achieve the end result. The overall definition of what the project is supposed to accomplish, and a specific description of what the end result should be or accomplish. A major component of scope is the quality of the final product. The amount of time put into individual tasks determines the overall quality of the project. Some tasks may require a given amount of time to complete adequately, but given more time could be completed exceptionally. Over the course of a large project, quality can have a significant impact on time and cost (or vice versa).
Together, these three constraints have given rise to the phrase “On Time, On Spec, On Cost.”
How to use the triangle?
Decide at the start of a project which version of the triangle you will use and agree with the project stakeholders which of the three or four objectives are most important. Assess all changes, risks and issues against the triangle and weigh up your course of action against the impact on your critical objective.
For example, if the key project constraint is cost, only the most business critical change requests are likely to be approved. However, if quality is the biggest goal time and cost might move to accommodate enhancement requests.