Let’s continue with the house example except this time instead of being a homeowner I am a builder. Let’s suppose I am a small “mom and pop” and not Lennar. For several decades after the Great Depression and before the Great Recession small builder all across the Country would buy a lot, build a house and sell for enough profit to stay in business. These builders did not use project management tools to build these homes, they did not need to because they had experience and always made enough profit to get along.
Then came the Great Recession and many of them lost money or went out of business because the losses were too great. The ones that did survive and are still in business having been waiting on the sidelines, wondering is it safe to get back in the game?
You see in 2005 the builder had profits of 25-50%, he did not have to worry about details that much, everything “always” worked out in the end. But now his profit margin might be 7-9% if his very careful with expenses.
This where project management comes in, not only can tools like Net Present Value or Return on Investment help you determine if you can make a profit with your next project but other tools that can help to manage Risk and Time to avoid costly mistakes or delays.
These tools primarily help you manage two this things, cost or time. I think cost is the easiest to manage because cost is usually fixed or accurately estimated. Time-lines on the other hand can be greatly affected by many things such as weather, supplies, and many other inter-dependencies.
In comes the Gant chart here we divide our project into segments using milestones and charting inter-dependencies that we can easily monitor. When a milestone is not met early in the project, we can easily make adjustments or corrections that keep us on track.
