PPM 101: Why You Need to Develop A Phase-Gate Process

Phase-Gate Overview

The Phase-Gate process (also known as Stage-Gate™) is a governance structure to evaluate, authorize, and monitor projects as they pass through the project lifecycle and is a critical component of project selection and portfolio oversight. In the previous post we discussed the work intake process which brings new project proposals to the portfolio governance team. In this post we will cover the basics of how a phase-gate process further enhances portfolio management. A winning portfolio must contain winning projects, therefore the portfolio governance team must be able to discriminate between good projects and great projects. This process enables the governance team to review projects in a consistent way based on defined criteria for each gate.

A phase-gate process includes two or more phases such as: Discovery, Planning, Develop, Execute/Control, and Closure. For each phase of work, the project team has a set of tasks to complete before returning to the governance team for a gate review. At each gate review meeting, important information is provided to the portfolio governance team to make a go, no-go, hold, or modify decision related to the project. Without a phase-gate process, unnecessary or misaligned projects can enter the portfolio and significantly reduce the benefits from strategic projects in the portfolio. Project deliverables and metrics further ensure that the projects are done right. Together, a successful phase-gate process ensures that the right projects are done right.The diagram below highlights a sample phase-gate framework where portfolio criteria is used at each gate to ensure the right work is being done.

Phase-Gate Framework
Phase-Gate Framework

Reasons For Developing A Phase-Gate Process

There are eight reasons why you need to develop a phase-gate process.

Without a phase-gate process, unnecessary or misaligned projects can enter the portfolio and significantly reduce the benefits from strategic projects in the portfolio.

Screen Out Misaligned Projects

A successful phase-gate process filters out poorly aligned projects. Every organization will have more projects than it can execute, which requires the portfolio governance team to carefully select the best project. Some projects may look good on paper but are completely misaligned from the organizational objectives and strategies. When organizations have well established evaluation criteria, gate reviews are an excellent way of filtering out these misaligned projects.

Control the Flow of Incoming Work

Gate reviews can also act as a valve to control the number of projects entering into the portfolio. Even if every proposed project is a winner, your organization still has limited resource capacity to get the work done. Projects need to be initiated at the right time so that the organization is not overloaded with work. The phase-gate process works in parallel with portfolio planning.

Steer the Scope of Project Work

Gate reviews afford the portfolio governance team an opportunity to direct the scope of projects. Without gate reviews, project work can continue for months without executive oversight. Successful organizations review the statement of work for each project and identify “must have” versus “nice to have” components of scope. This is important because it gives the portfolio governance team options when reviewing and selecting projects and does not force them into making “all or nothing” decisions.

Improve Project Quality

The phase-gate process provides the portfolio governance team with project deliverables that contain key project information. The deliverables themselves ensure consistency in the process and help ensure that a good project plan is in place. By having the portfolio governance team review key project deliverables, it helps ensure that Project Leaders create higher quality deliverables.

Greater Visibility of Important Projects

The phase-gate process provides much needed visibility to the entire organization of what projects are being reviewed and what is the current status of each project. Without a phase-gate process, it is easy to lose track of projects, and even worse, shadow projects get approved without formal reviews, eroding portfolio value.

Better Monitoring of Project Progress

The phase-gate process not only allows greater visibility of work, but also provide a mechanism for tracking progress and status of projects at different phases of the project lifecycle. Projects that have been stalled in a particular phase or are in difficulty can receive help from senior management faster because the projects are being monitored.

Improves Communication Throughout the Organization

Solid organizational communication is a success factor for good portfolio management. Having a phase-gate process strengthens and improves communication throughout the organization by providing greater visibility of projects in the phase-gate process. By utilizing a common project language and having a consistent process, employees will better understand the work being done across the company.

Provides Structure to the Project Management Process

Finally, the phase-gate process provides structure for the project management process by determining a minimal set of project deliverables needed for gate reviews. Although the phase-gate process by itself does not replace a formal project management methodology, it does standardize the process for bringing projects through each review phase, thus reducing confusion and strengthening the project management process.

Phase-Gate Summary

Phase-gates are an important component of portfolio governance and can apply to waterfall or agile projects. After an organization establishes a work intake process a full phase-gate process can be added to increase the quality of project proposals and help ensure the portfolio contains winning projects. The key is to have just enough process to be effective without being bureaucratic. Only information that the portfolio governance team needs to make a decision should be collected as part of the gate reviews. Like any process, information that is collected but not used is a drain of organizational resources. Phase-gates can be very effective when set up correctly.