Hi, Mike.

"Hi Steve - great article. I like the idea of putting a money value on the time - something like LAD's per day."

Exactly, Mike! And thanks for the compliment. I hope that you will think up an appropriate guest blog about forensic analysis that you can write about and post on the site some time soon, after the Comment function is working.

"I am not sure of the difference in monetary terms between Cost and Scope - if scope goes up from - say - 10 houses to 12 then surely the cost increases at the same ratio."

In that particular case, the ratio may stay the same. But even if the ratio does stay the same, the raw "expected project profit" (EPP) would be different. If each house costs $100K and is worth $120K, then ten houses should produce an EPP of $200K for $1.0M invested while 12 houses would produce an EPP $240K for $1.2M invested. As you point out, still a return of 120% -- but more raw profit.

Additionally, not all scope changes are simply increases in identical units -- what if the scope change is instead to include balconies on just the 5 exterior units out of the 10? If each balcony costs an additional $30K to construct, but increases the value of those 5 units by $35K each to $155K, now the whole project would cost $1.15M and the value would be (5 * $120K) + (5 * $155K) = $600K + $775K = $1.375K -- a decrease in return percentage from 120% to 119.6%, but an increase in raw profit of $25K. Both raw profit and return per dollar invested should be analyzed for scope changes -- sometimes one is more important and sometimes it's the other. 

"The time should also increase but not necessarily by the same factor."

Right, and that's a hugely important factor! If adding the balconies winds up on the critical path and delays the project by 10 days at a value/cost of time of $8,000 per day, that's a delay cost of $40,000! The true cost (TC) of any scope is the sum of its resource costs plus its drag cost. In the case of the balconies "fragnet", we're generating $175K of added value at a TC of (5 * $30K) + (10 * $8K) = $150K + $40K = $190K. If done in this way, the fragnet is losing us $15K. We either have to do the balconies differently or not do them at all. IMHO, almost every large project is performed including scope and work that adds less value than its true cost.

And that's yet another reason why drag, drag cost and true cost are so important to measure. And to include a value breakdown structure (VBS) that ties their value-added to the individual scope items, as well as their cost. 

"The top angle of the triangle therefore represents the "Risk Factor" inherent in the project - Shorter time = Narrow angle = Lower risk and vice versa. You mentioned this in your article but not graphically."

Yes. Sometimes I include RISK as an item right in the middle of the triangle. You may be correct that I should keep including it. Risk (and opportunity!) is certainly crucial to take into account if one accepts that projects are investments. But for me, rather than risk being another "side", it always manifests itself through its impact on one of the three standard sides: scope's value, resources' costs and time's value/cost. All of course are estimates until often long after the project is completed, and so risk probabilities need to be factored in. 

Mike, maybe I just bored some readers to death --but thanks so much for taking the time to read the blog and post your comment here.One thing I'll say -- you clearly find this topic interesting. I know you don't usually care to read PM books -- but I think if you read my new one, you'd find a lot of it both new and interesting.

And of course I'll be here to catch all the comments/barbs you throw at me!

Fraternally in project management,

Steve the Bajan