The Triple Constraint

In project management, like most things in life, there is no free lunch.

If you want to finish sooner, you will have to cut the project scope.  If you want lower costs, you have to cut expenses.  If you want higher quality, you have to pay more.

This constant tug of war is called the Triple Constraint, also known as the Project Management Triangle, or the Iron Triangle.  It is the relationship between the three most important restrictions in a project.

These three restrictions are:

1. Time
2. Cost
3. Scope

Time

Because a project is defined as a temporary endeavor, with a defined beginning and end, the completion date is almost always an important consideration in project success.

To manage this arm of the triple constraint, there are two sides to the coin.  In project manager lingo:  Planning and control.  And in laypersons terms:  Firstly, producing a reliable project schedule, and secondly, ensuring that the schedule is met.

The first side of the coin is called project scheduling.  Producing a reliable project schedule requires five basic steps:

1. Determine the Work Breakdown Structure (WBS)
   In layperson lingo, the WBS is a listing of tasks required to carry out the project.  The project manager considers the most ideal way to break the project down, but most often this is done along the natural thresholds of project phase changes, deliverables, or resource changes.
2. Determine the task dependencies
   The project manager must determine which tasks are dependent on one another.  Modern project management software can model sophisticated dependencies with lead and lag times, however for small projects a simple determination of which tasks are prerequisite on one another will suffice.
3. Produce the Network Diagram
   The network diagram determines the critical path tasks and the float of each task.  This allows the project manager to determine how much room each task has to move, or to be late, without affecting the final project completion date.
4. Produce the Gantt Chart
   The Gantt chart is the simplest and best way to communicate the project schedule.  As such, it is one of the project manager’s most important tools.  The gantt chart continues to communicate the schedule throughout the project.
5. Resource leveling
   Because of the gantt chart’s inherent inefficiency in communicating the project’s required resource usage, the resources must be leveled (smoothed) to ensure their efficiency and minimal cost.  For example, if the schedule requires 6 laborers during the first week and none during the second, it might be more economical to lengthen the schedule to have 3 laborers for two weeks.

Producing a realistic but achievable schedule is a great first step, but it’s only half the equation.  What if the schedule is excellent but the project doesn’t finish on time?  The second side of the coin is called project control, which refers to the ability to ensure that the project meets its required schedule.  That’s where earned value analysis comes in.

In earned value analysis, the project manager determines three initial variables from the project data.  Each of these variables is determined on a task by task basis.

1. Planned Value (PV)
   The expected schedule progress, expressed as a task budget.  For example, if the current date is day 2 out of 10 days for the task, PV = 20% x Task Budget.
2. Earned Value (EV)
   The actual progress of the task, expressed as a task budget.  For example, if the task is 30% complete, EV = 30% x Task Budget.
3. Actual Cost (AC)
   The actual cost of the task, compiled from project records.

From this, two variables tell the project manager the schedule status at the current time (or the point of analysis)

1. Schedule Variance (SV)
   The amount of deviation of the project from its expected schedule progress.  SV = EV – PV.
2. Schedule Performance Index (SPI)
   The deviation expressed as a percentage of the task.  This is effectively a schedule efficiency metric, it tells you how efficient the project has been.  SPI = EV / PV.

And finally, four variables tell the project manager what to expect in the future.  They are an extrapolation of the current trend.

1. Estimate to Complete (ETC)
2. Estimate at Completion (EAC)
3. Variance at Completion (VAC)
4. To Complete Performance Index (TCPI)

I won’t go into detail for each of these because they have various methods of calculation.  To learn more about earned value analysis, please see our article here.

The basic strength of earned value analysis is its ability to provide a fast early warning signal of project distress.  If a task is, say, 30% complete, but should be 40% complete, it’s not necessarily readily obvious to the project manager, but the Schedule Variance will calculate negative and give you a heads up that something might require active intervention before it morphs into a bigger problem.

Cost

Once again, since a project is temporary, it has a fixed budget and this is almost always an important consideration in project success.

And once again, the coin has the same two sides:  Planning and control.  That means firstly, producing a solid estimate, and secondly, ensuring that estimated cost is not exceeded.

Project estimating uses two main estimating techniques.  These techniques are applied at the task level.

1. Analogous Estimating
   This involves using actual costs from previous or similar projects to determine an estimate for the new project or task.  For example, the previous house cost $200,000 to build, therefore this one will be $250,000.
2. Parametric Estimating
   This technique involves the use of unit rates, for example, the cost of building a house is $50/square foot.

Preparing an estimate for the whole project uses either a top down or bottom up approach (or both):

• Top Down Estimating:  Estimating the overall project cost first, then apportioning it into the individual tasks.
• Bottom Up Estimating:  Estimating each individual task first, then rolling them up into an overall project estimate.

In practice, both techniques are generally employed.  Bottom up estimating is important to get comfortable with the estimate, but the overall project estimate usually has contingencies, or management reserves, applied, or a project budget is assigned that can be apportioned into the tasks.

That’s the first side of the coin.  But what if the budget is realistic and achievable, but project execution is poor and the budget is exceeded?  That’s where earned value analysis comes in.  Similar to the time side of the triple constraint, earned value analysis tracks both time and cost.

Since I have already talked about earned value analysis in the Time section, above, I will not duplicate myself here.  We have written extensively on earned value analysis, so please feel free to read further.

Scope

Project scope refers to the items that are, and are not, included within the project.  If you want to increase the project scope, for example create an additional product, the project budget and schedule will both need to adjusted to accommodate the change in scope.

This arm of the triple constraint is often called Quality.  An increase in quality is the same as the an increase in project scope (for the purposes of the triple constraint), since the quality adjustment requires an equal adjustment in the project scope.  The work breakdown structure is adjusted to accommodate the change in quality.

Scope is the single biggest reason for project failure.  Unauthorized work has a strange way of creeping into the project, or project work gets bigger (gold plated), or the project is stopped and started, causing budget and schedule issues.  This is called scope creep.

As with the other two arms of the triple constraint, the same two sides of the coin are present:  Planning and control.  Planning means ensuring the scope is properly defined, and controlling means ensuring it doesn’t change throughout the project.

Hence, writing a project scope statement is one of the most important ways to ensure project success.  There are no specific guidelines for how detailed to make a scope statement, but the more detailed, the better.  Obviously, you can’t itemize every nut and bolt, but a good scope statement will reduce project risks by communicating the important parts of the project.

In addition, scope statements should contain the following items:

1. Work Description.  This is the basic form.  A simple description of the work, for example, this project is to build a house.
2. Deliverables.  What will the project produce?  Not all projects have a tangible product as a deliverable, for example, a project to provide a training course would have the course itself as the deliverable.
3. Justification for the project.  The business case can be a powerful indicator of what the boundaries of the project are.
4. Constraints.  The physical boundaries of the project, such as legislative constraints, and stakeholder imposed constraints.
5. Assumptions.  If there are any assumptions made as part of the project plan, they can be mentioned in the scope statement to ensure that there are no miscommunications.
6. Inclusions/Exclusions.  Any boundaries of project work that can be explicitly included (or excluded) will reduce project risk accordingly.

The second side of the coin is the scope validation during the project execution phase.  The scope statement doesn’t do much good if it never gets looked at and scope creep starts to multiply and infect the project.  For this reason, project control must include a scope re-validation process.  This process can be as simple as reading the scope statement and signing off on it at regular intervals, or at project phase changes.