In this video I investigate Project Management and look at the important Triple Constraint!
VIDEO SUMMARY
Last week I made a video, and I mentioned the concept of Project Management. I wanted to spend some more time talking about project management, because this is a really practical idea that you can use in your day-to-day job.
Project Management is a whole field of study. You can become a certified project manager. In Project Management you learn a standardized set of tools and reporting that is consistent across the industry. All of these reports help you keep projects on track and communicate your results to your stakeholders.
What I mentioned before was that Project Managers report on three main subject areas:
- Budget
- Creating a cost estimate of the project
- Tracking actual costs against the budget
- Schedule
- Creating a detailed schedule of the project
- Determine the time to completion
- Report whether the project is on schedule
- Scope
- Describing the final project deliverables
- Describing the stakeholder’s requirements for those deliverables
- Detailed scope ensures the stakeholder’s expectations are met
These three main elements form what is known as the Project Management Triangle (otherwise called the Triple Constraint).
- Budget
- Schedule
- Scope
The concept is that all three elements are related. It is easier to imagine this using an actual example. So let us imagine we are building a house. If you want to lower the cost of the house, you could achieve that by accepting the project might take longer to accomplish. Another way to lower cost would be to decrease the scope, like building a smaller house. And if you wanted to speed up the schedule, you could always pay people overtime, and increase the cost.
The problem occurs when people try to impact all three at the same time. Someone might say, “I want a bigger house, in half the time, at half the cost.” They are likely to be disappointed. It is unrealistic to impact one corner of the triangle without making adjustments to the other corners.
This triangle is so practical for you to understand. If you are good at this, it helps you to manage expectations and deliver results. The problem that often happens in business is people come into organizations and they slash the budget. And they slash the budget without concern for schedule and scope. We have all seen this happen. It happens a lot. And so what happens is you miss deadlines or end up not completing the work. So you can use this triangle to explain the impacts of the budget cut. You can quantify how deadlines will be impacted, and quantify what scope will not be completed. Then it is up to you to communicate that to your stakeholders.
I have found that business is a lot about trust. So when you put an estimate out into the world or you make a commitment about a project, you want your promises to be realistic. You want to say how much it will cost, how long it will take, and what work will be done. And if someone says they want the project done at half the price, you can explain that the scope will be reduced by half. They may not like that answer, but you do not want to fail to deliver on your promises. In the long term, it is better that people realize they can trust your word.
I have found Project Management extremely helpful in my career, and so I encourage you to learn more about this subject. If you have found Project Management helpful, leave a comment down below and let me know what you think!
Thank you for watching. The best way to supercharge your business is through accounting and corporate finance. I release a new video every week, so come back and check out next week’s video.
If you find these videos helpful, please subscribe to my YouTube channel.
Neither Zach De Gregorio or Wolves and Finance Inc. shall be liable for any damages related to information in this video. It is recommended you contact a CPA in your area for business advice.