There is an assumption that the Iron Triangle/Triple Constraint measures of ‘on time, on budget, to specification’ are benign. There is no harm or risk in using them as the measures of project success.
However, this not true. Use of these measures actively enables and inadvertently encourages the destruction of business value. These measures are not benign, they are dangerous.
Recent research has shown that use of these measures discourages the adoption of benefits delivery measures. Therefore, organisations using the Iron Triangle measures are less likely to want to target and deliver benefits. Frightening.
Here are 10 ways the Iron Triangle measures can destroy project success and business value:
1. Loss of focus
The measures include little-to-no focus on the targeting or delivery of business benefits and value. This allows project teams to ignore the business impacts of their detailed design decisions resulting in many potential benefits being designed out of the realms of possibility.
2. Encourages short-term thinking
The measures’ emphasis on cost and cost containment is often at the expense of longer-term business value. Decisions made on the project to bring it in ‘on budget’ can destroy longer-term value. Short-term gain for long-term pain.
3. Ignores the project’s true purpose
These measures ignore the whole purpose of project investments—to improve the business. No organisation commissions projects to see “if we can bring a project in on time and on budget”. Projects are commissioned to deliver business results.
4. Obscures failure
The measures allow a ‘perfect project’ (on time, on budget, to specification) to be delivered that fails in terms of actually improving the business. The business wants results, improvements and the promised benefits. How efficiently the project was delivered is a secondary concern at best.
5. Ignores impact on business
The measures allow project (and governance) teams to ignore the business aspects and considerations and only focus on the project dimensions, for example, only identifying the project team workload, not all of the workload required to deliver the business outcomes, benefits and value.
6. Encourages inefficiencies
The measures allow the project, the business changes and the business to be seen as separate dimensions and even be allocated to different individuals, allowing both duplication of effort and gaps to be created between the different parties that waste time, effort and funds and compromise the results delivered.
7. Focuses on outputs, not outcomes
The measures only measure the efficient use of the input ‘triple constraints’ rather than the effective delivery of the sought after outputs—the business outcomes, benefits and value. Consequently the management of the ‘benefits’ is often subordinated allowing significant value to be missed, lost or destroyed throughout and beyond the project’s duration.
8. Ignores investment goals
The measures do not ‘paint a picture’ of what the project investment is trying to achieve that can unify all of those involved and impacted enabling them to focus on a common goal. Consequently different staff and stakeholders can have different expectations that lead to different levels of satisfaction with the results. This then has to be addressed through ‘expectations management’ an unnecessary extra level of workload.
9. Sidelines benefits realisation
The measures allow the true business measures of success—the defined and measurable desired business outcomes, benefits and value—to not be fully defined as the focus is on time, cost and specification. As the business measures of success are not defined, they are not targeted, delivered or measured resulting in significant loss.
10. Wrongly emphasises constraint over opportunity
The measures are seen as ‘constraints’ to be tightly controlled when they should be seen as key ‘value determinants’ to be leveraged to maximise the net value delivered. For example:
- Project costs can be optimised by eliminating high-cost but low-value outcomes—this can enable 90% of the available value to be delivered for only around 60% of the initial cost.
- Opportunities to increase delivery time or cost or alter the specification can be assessed in terms of their measured impact on the resultant business value. Increases of 10% in cost that can, say, double the business value can be objectively assessed. These are value decisions, not cost decisions.
- Time delays and cost overruns (and project re-baselining) can be measured as destroying value. Every day taken over the optimum delivery timeframe is a day of benefits lost forever. Every dollar incurred over the optimum delivery cost is a reduction in the net financial value of the project. Time and cost are still important but as value determinants, not delivery controls.
As one executive observed, “If you’re two months late and 20% over budget but deliver an excellent result, then in two years time no one will remember the project statistics, they’ll just remember the increase in business performance. I focus on improving the business results.”
This is not to argue that on time/budget are not worthwhile outcomes, but to argue they are not the primary measures of success!
This was originally published as ‘10 Ways The Iron Triangle Measures Can Destroy Project Success‘ and has been reproduced with permission. You can read more in the ebook ‘Why your measures of success are destroying your projects‘, from Totally Optimized Projects.