Exploding The Project Myths – 4
‘Time-cost-specification’ - is called the ‘iron triangle’ for projects. The goal is to deliver any project on time, on budget, and to specification. However, it is often argued that this is too demanding and unreasonable, so something has to give. "You can have two out of three" is the proposition.
This does not make sense. Starting a project with a view of compromising the value is an admission of failure upfront.
The Real Truth
Scope (specification) and value are the primary controls and measurement parameters
The primary focus of a project needs to be on the one dimension that is too often missing – value. Every compromise to time, cost, or specification (scope) reduces the resultant value. Delivering value is the reason for doing the project.
- Time overruns reduce value by extending the time before benefits are fully realized.
- Cost overruns reduce the net value realized.
- But scope changes can destroy all of a project’s value.
Instead of thinking in terms of managing the ‘iron triangle’ you should think in terms of optimising the scope and (net) value.
TOP argues that having defined your project you then need to optimize your scope and value.
You can make informed optimization decisions by asking four simple questions:
- Of each outcome – what value does it enable, support, or deliver? – Is this outcome necessary?
- Of each outcome and its benefits – how much does it cost to deliver? – Is it worthwhile?
- Of each high cost/low-value outcome/benefit with downstream dependencies – How can we adapt the outcome to reduce its cost of delivery while preserving its downstream value contribution?
- Of the scope – is it worth spending more now to reduce later ongoing operating costs?
Your business goal on any project is to realize the optimised net value – to deliver 90% of the value for 60% of the cost – not just deliver ‘something’ on time and on budget.