The triangle of the value-creation industry

A project is an activity, limited in time and scope, which transforms an organisation from an initial state into a target state. The project management triangle [1] correlates cost, time, scope and quality of a project and emphasizes that project management choices regarding these factors affect results. All interpretations of the project management triangle I’m aware of consider cost and time to be edges, while in some interpretations the third edge is scope and in others it is quality. But that doesn’t matter much, the point being that both quality and scope are related to the other project factors. For the remainder of this post, I’ll pick the interpretation with quality as the third edge.

Project management triangle

This means that the size of a triangle reflects the size of the project scope – larger triangles mean larger projects.

Big vs small project scope

Industries on the project management triangle

It turns out that entire industries have evolved in the ecosystems that are defined by the vertices of the project management triangle.

Industries and the project management triangle

Consulting firms: cheap and good, but slow

Consulting firms specialise on delivering scopes that are too difficult for the client to handle themselves, usually because a combination of scope, required experience and complexity exceeds the client’s manpower. Clients focus on their main business, which is running day-to-day activities while projects are temporally limited, one-time transformations which take the client from a previous state to a target state and require resources that were not present in the previous state and won’t be needed in the target state.

The cooperation between consulting firm and client always comes with an organisational overhead due to cultural and procedural differences between consultant and client and because of the upskilling required in both organisations: consultants need to learn about the business and clients need to learn about project competencies. This organisational overhead means primarily that more time is needed for the project to finish. While more time means also higher costs, hiring a consulting firm is still cheaper than up-staffing and up-skilling the organisation and definitely less disruptive to business-continuity.

In-house: fast and good, but expensive

In-house departments and teams execute projects faster and better than anyone else, because they already are part of the organisation and are well acquainted with the organisations’ culture and processes. Also, assuming stakeholder buy-in, in-house teams have the highest motivation to execute a project as they benefit not only from a successful project completion, but also from the execution itself as opposed to consultants who are primarily an expense (although there might be other synergies such as staff up-skilling).

On the down-side, constantly maintaining workforce that is capable of successfully executing projects (reminder: a project is a one-time, limited activity) without outside experience (in contrast, consulting firms gather experience from multiple projects across clients and industries) is expensive, requires training and necessarily lower utilisation than comparable production line teams.

Startups: fast and cheap, but bad

A startup’s mission is to prove a point: do a new thing or do an old thing in a new way. Startups live around ideation, lean design and MVPs. The goal is not to do something as good as possible, but good enough to validate the mission. This constraint shifts the project management triangle towards consuming fewer resources, which translates mainly to expedience. The regulatory context in which startups operate (reduced liability while turnover is low) also limits the need for the type of quality control one would find in a larger, established organisation.

References

[1] Project management triangle
https://en.wikipedia.org/wiki/Project_management_triangle

[2] The lean startup
https://theleanstartup.com/

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