6-04-2015 How to Reduce Soft Costs With a Critical Path Map
For solar installers, soft costs are a fact of life. However, they don’t have to be such a costly fact. There are ways you can reduce soft costs for your business. You just have to take the time to objectively analyze your operations.
You need to know how your business works and where it doesn’t work. Streamlining your business’s operations is one of the best ways to reduce soft costs. Using a critical path map can help you visualize your project process and make streamlining easier.
What is a critical path map?
A critical path map is a tool used to calculate the longest path of planned activities to the end of the project. It also determines the earliest and latest that each activity can start and finish without making the project longer. The technique was developed in the 1950s by Morgan Walker of DuPont and James Kelley, Jr. of Remington Rand.
For a critical path map to be useful and help you reduce soft costs, you must include the following factors:
- A list of all activities required to complete the project
- The time each activity will take to finish
- The dependencies between the activities
- Logical end points like milestones or deliverable items
Here’s an example of an extremely basic critical path map that includes GreenLancer’s services. The orange boxes represent solar installers. The green boxes represent GreenLancer. The blue box represents the city, and the purple box represents the utility.
Keep in mind that each critical path map is unique, and yours should be more detailed than this one. You don’t have to include a description of each step like we did. You just need to make sure that you include the number of days (or hours) that each task will take to complete. Tailor your map to your business and your schedule. You’ll probably find that your map varies based on these factors:
- Which AHJ and utility company you work with
- Whether or not you apply for an incentive
- Solar system design
- Site-specific constraints
Why use one?
Critical path maps let you see your project in an entirely new light. They help you determine which tasks are crucial for project completion and which tasks can be postponed to a later date within the project timeline. Prioritizing your project tasks can help you reduce soft costs by minimizing idle time.
The maps are also useful tools for better managing your supply chain. If you know you won’t need your materials for a while, you can hold off on ordering them so they don’t sit idle in a warehouse. You’ll have less inventory and fewer items to worry about damaging.
Another extremely helpful aspect of critical path maps is they enable you to more accurately forecast the completion date for a project. You can use this aspect of the critical path map to help you do a cost-benefit analysis of doing business in a specific AHJ. If you find that projects in one AHJ consistently take longer to complete because of permitting or interconnection red tape, you may not want to continue working in that AHJ.
Try It Out and Reduce Soft Costs
Create a detailed, critical path map of your own installation process to get a feel for how long a typical project would take. You can also determine where your company needs to improve processes and minimize idle time. Taking an objective, analytical look at your company can be time-consuming, but if you want to reduce soft costs, that’s one of the best ways to go about it.This post is based on Pamela Cargill’s Lean Operations poster presentation.