Looking for a definition of a milestone in terms of project management or business in general? You are in the right place. In this article, we’ll explain what a milestone is, how you can use it in your business, and show meaningful examples from different industries.
Milestone definition: What does a business milestone mean? What is a milestone?
A milestone is an important event or action in a project or your business journey that represents an important stage of development. Milestones are not arbitrary goals that you cannot achieve. They are the key points of the entire project that demonstrate some progress. All of them should indicate that you have reached the next “mile” in your business journey.
This can be as simple as landing the first customer in a new industry or as complex as releasing a new product prototype. Business milestones are usually not just a measure of progress, but part of your contract.
What are contractual milestones?
Contractual milestones are the stages of the project when the project sponsor commits to paying you a certain amount of the full price of the project. For example, it can be the finalization of the first usable product prototype or the first website design. These milestones usually have due dates and if the customer doesn’t meet them, it affects their payout.
Contractual milestones are common in industries such as software development, design, and manufacturing.
Why are milestones so important in project management?
According to PMI’s 2021 Project Management Study, the most common causes of project failure are related to poor prior planning and unexpected changes.
Analyzing and creating important milestones in advance will help you outline a clear path to success. Dividing the project into milestones also makes it easier to identify clear risks and obstacles that can hold the project back. This detailed planning ahead of time will help you avoid any unwanted surprises after you’ve made a big investment.
For large projects, project milestones are optional. This will ensure that the flow of the project continues throughout its duration. You can also set quarterly business growth milestones to motivate your team.