What is the Project Triangle?

Development projects need to be planned, managed, and delivered under certain constraints. In project management, these constraints are scope, time, and cost. These are also referred to as the Project Triangle, where each side of the triangle represents a constraint; wherein any changes to any of the sides causes a change in the other sides.
 
For example, a change or adjustment to reduce the time will change the scope and the cost. A further refinement of the constraints places quality at the center of the triangle and that turns it into a fourth constraint.
 
The triangle illustrates the relationship between four primary forces in a project. Scope refers to what must be done to produce the project's end result. The time is the planned schedule to deliver the project. The cost represents the planned budget or resources available. Quality represents the fit-to-purpose that the project must achieve to be a success.
 
These constraints are competing constraints: an increase in scope can result in an increase in the time and an increase in the cost, a reduction in the time constraint can only occur with a decrease in costs and reduced scope, and a reduction in the cost means a reduced scope and time.
 
The job of a Project Manager is to guide a project towards the desired goal of respecting those constraints. The difficulty lies in the fact that this is always a tradeoff. If more has to be created, then the project needs more time or more money. Project Management is a profession of tradeoffs and decisions. Understanding the project triangle allows for better choices, especially when the projects need to make tradeoffs; If the project adjusts any one side of the triangle, the other sides are affected.
 
For example, to adjust the project plan to:
  • To move the scheduled to finish to an early date you need to reduce the scope and cost.
  • Reduction of the project budget results in less time and a decreased scope.
  • Increase scope can result in an increase of the time and cost.
 
Changes to the plan can affect the triangle in various ways, depending on your specific circumstances and the nature of the project. For example, in some instances, shortening the schedule might increase costs. In other instances, it might actually decrease costs.
 
Quality is at the center of the project triangle. Quality affects every side of the triangle, and any changes made to any side of the triangle will affect quality. Quality is not a factor of the triangle; it is a result of what happens from the proper management of time, cost, and scope.
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Cost Accounts to Develop a Project Budget

Many projects have one overall budget that includes all the project labor costs, travel costs, materials costs, etc. This works fine for smaller and medium-sized projects. However, as a project gets larger it helps to have the overall budget broken down into smaller subsets. This is similar to the concept of breaking down a project with a long duration into a set of smaller projects. Having your budget allocated at a lower level allows you to keep better control of the details and it may point out potential budget trouble quicker than having everything rolled up into one consolidated project budget.

Cost accounts are used to allocate the budget at a lower level. Cost accounts are formally established in your organization's General Ledger so that your budget is actually allocated in each detailed cost account and the actual project expenses are reported at that level as well. The cost accounts can be established in a couple of ways. One way is to simply divide the different types of costs in separate cost account budgets. In this approach, the project manager could have a cost account for internal labor charges, external labor charges, travel costs, per diem costs, training costs, material costs, etc. Typical cost accounts are used to track budget expenses in the NGO financial system, also called the chart of accounts (COA).

  • 50XX - Personnel Costs
  • 51XX - Professional Services
  • 52XX - Equipment Purchases (Expensed)
  • 53XX - Materials, Services, and Consumables
  • 54XX - Travel and Transportation
  • 55XX - Occupancy
  • 56XX - Financing/Depreciation/Miscellaneous
  • 57XX - Grants/Sub-grants
  • 58XX – Contributions in Kind

Another way to set up the cost accounts is based on the WBS. After completing the WBS, the project manager can create cost accounts for each group of related activities. Another option is to set up a separate cost account and budget for each phase, stage, or outcome. This method allows tracking the costs to achieve a specific objective or milestone, something that the other method will not be able to do as it tracks costs associated with accounting codes.

If the cost accounts are for related sets of work on the WBS, the project manager has options to track different costs. The various types of costs can be tracked with sub-account numbers within the cost account. The more detailed the cost accounts are, the more work will be required to set them up and allocating and tracking the cost account budgets. However, if the project is large and costly, the project manager will definitely want to utilize some aspects of this technique.

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