A Policy Constraint is a type of constraint that be influenced by either an internal or external source. A Policy Constraint refers to a limitation or restriction internally or externally set - this includes rules, guidelines, or policies. Generally, these policies impact decision making, strategic planning, and can be a key constraint on a potential solution.
There are plenty of examples in our lives and business. Examples of Policy Constraints may include:
Law: laws and regulations of parent organizations, umbrella organizations, regulatory bodies, or government policy and legislation
Contractual: terms or conditions
Financial: IRR/ROI requirements for a project or business unit
Due Diligence: the level of care, judgement and investigation that can be reasonably expected of an organization or professional. As due diligence is a legal requirement or professional ethic, it generally can't be skipped
Quality: uptime, first pass yield, number of returns
Price: price ceilings / floors or limitations on price increases / decreases
Safety: safety tests, certifications, or fire codes
Hints:
Do legal / policy restrictions or commitments to partners, customers or regulators impact strategic and tactical decisions of the company?
Make sure to differentiate what is a policy (hard constraint) vs a guideline (soft constraint) from your customers and authorities.