The iron triangle, an asset for your business?
All agile software development projects are created with specific goals in mind. Something needs to be delivered by a certain date, within the framework of a certain budget, and of a certain quality. These three constraints - resources, time and scope - and their mutual relationship represent “the iron triangle”. You have to find a balance between these three parameters. When you change one of the constraints, it affects the other two. For instance, if the scope changes, then the required time and/or resources change as well.
Within the context of a project, the model clearly indicates the parameters available to a project manager to manage the cost of a project.
However, the iron triangle cannot be used as a framework to influence the total cost of all projects across different projects, or more broadly across an entire organization. After all, in this context, constraints that can be considered fixed on projects, such as the environment and the processes used, also play a role. As organizations are constantly managing multiple projects and tend to forget about the cost this brings, we are summarizing some insights in this blog post.
How to calculate the costs of projects
The cost of projects can be abstracted into a function of five variables: size, process, team, environment, and required quality. Or in other words:
Cost ≈ (Team) (Environment) (Quality) ( Size^Process)
From this formula several topics can be derived that can be used to optimize the cost of projects. Some are obvious; are the right people available to do the job? Do they have experience in this type of project? Does the team have access to the right tools to do the job efficiently? Are routine tasks automated where possible?
Others are more subtle. For example, the abstraction suggests that it is more efficient to divide a large project into smaller parts, after all if a = b + c then a^x =< b^x + c^x. This translates, for example, into dividing projects into different phases or into working out an MVP before committing to the total foreseen scope. So, if you want to optimize the project operation within your organization, you have to look beyond the iron triangle.
During conversations with partners and customers, we are always looking to see how they fill in these five parameters and what effect they have on the progress of the project in their organization.
Which of the five parameters are you currently working on? We’d like to assist you in this matter. Contact us via our contact page.