Does your organization suffer from a lack of consistency in its project management and planning? Is prioritization an issue? Are you wasting resources on the wrong projects?
If so, you may benefit from implementing the stage-gate framework. A means of aligning projects with business strategy, this process can be an important tool in your arsenal of PMO best practices.
What is the stage-gate process in project portfolio management (PPM)? By dividing projects into manageable components or “phases,” separated by “gates,” you can make better decisions, prioritize more effectively, and manage risks.
Originally applied to product development, today, the process is widely used for project management, with PMOs and entire organizations identifying problems with their processes early on before they escalate. Leveraging the framework, you can enhance business processes and outcomes and deliver greater value.
What is a stage-gate process?
The stage-gate process was first described by Robert G. Cooper in a 1990 paper in Business Horizons, where he called it “a new tool for managing new products.”
“America is in a product war, and the management of innovation is the strategic weapon,” Dr. Cooper wrote. He explained that the stage-gate framework could be used to create new products from burgeoning ideas.
Today, you will also see the stage-gate process in PPM, as a framework for making decisions, when the project is divided into phases or stages. Many organizations use a PMO stage-gate process to grapple with complex projects and portfolios.
In a project portfolio governance context, projects are mapped out with stages and gates. Every stage is a phase. At the end of each stage, there is a gate. From there, you can decide whether to proceed, revise, or end the project. Each stage gate or checkpoint focuses on whether you have met the objectives for the phase and whether the project can move on.
Stages
The stages with a stage-gate framework are typically as follow:
- Stage 0: Discovery
Generate and brainstorm ideas, gather information, and develop and research possibilities.
- Stage 1: Scope
Define requirements, objectives, and stakeholders.
- Stage 2: Business Case/Design
Create a comprehensive plan to justify the project and meet the project goals.
- Stage 3: Execution/Development
Execute the project, focusing on creating the deliverables.
- Stage 4: Testing
Validate the concept, ensuring that you are meeting your project goals.
- Stage 5: Launch
Ensuring the details are all in place before delivering the finished project to stakeholders and/or users.
Gates correspond to each stage. For example, Gate 3, after Stage 2, could review the quality and effectiveness of your business case and plan. Stages can and should be tailored to your organization and particular project.
Agile vs. Waterfall vs. Stage-Gate Frameworks
Agile, waterfall, and stage-gate frameworks are commonly applied to both project management and product development. The primary difference between Agile and Stage-Gate process is this: “While stage-gate attempts to control uncertainty up-front to avoid later changes, agile seeks to adapt to uncertainty and accommodate changes for a longer proportion of the development process.” (Journal of Business Research)
Waterfall project management and the stage-gate framework are linear and structured. Waterfall methodology typically has 5 phases: Requirements, Design, Implementation, Verification, and Maintenance. Stage Gates can be used with waterfall projects, with the project broken up into distinct stages. Each checkpoint involves a clear decision: Proceed, backtrack, or scrap entirely.
On the other hand, agile is far more flexible. It is focused on iteration, with teams making constant changes and fast improvements. Agile also involves short sprints, rather than longer phases, with each sprint incorporating minor adjustments and feedback loops.
It doesn’t have to be either/or. The two frameworks can be merged to meet different goals. For example, agile sprints might take place during development phases, while gates can serve as checkpoints without preventing iteration from taking place.
Benefits of Using a Stage-Gate Framework
Lower Risks
The strict nature of the stage-gate framework allows you to address risks, such as compliance concerns, earlier in the process. This allows you to take a proactive approach to risk management at the beginning of the project cycle.
Reduced Regulatory Issues
In regulated industries, stage-gates are used to ensure compliance with regulatory requirements. At every gate, the project can be checked to ensure that all necessary guidelines are being followed, reducing risk and the potential for costly fines.
Optimized Resource Management
Because decision gates appear at every stage, you minimize the possibility of wasting resources on ideas that might not work out. You will be able to allocate resources to higher-value projects instead, boosting your project portfolios.
Better Project Prioritization and Strategic Alignment
You can ensure that projects continue to be aligned with your organization’s strategy. This gives you the opportunity to focus more on the projects that are producing the most value for your organization.
Greater Accountability
With checkpoints at every turn, teams must stay accountable for their requirements and deliverables. There is documentation at every stage of the project and greater transparency overall.
Improved Collaboration and Communication
Stay aligned on your objectives and project expectations. The stage-gate framework means you must collaborate to ensure the project is on track. Communication is necessary at every gate, resulting in fewer misunderstandings.
Higher Chance of Project Success
When using a stage-gate process in PPM, you ensure thorough reviews of project stages. That means you won’t risk skipping steps, and you can address errors before they escalate. Your project has a much better chance of staying on track, leading to better outcomes.
Challenges with a Stage-Gate Framework
While the stage-gate process works in many cases, it does come with some challenges. For example:
- The stage-gate process can feel bureaucratic, not strategic.
- Projects pass gates even when they’re misaligned with current priorities.
- Stakeholders may not see the value in governance checkpoints.
- Organizations may lack consistency in how project alignment is assessed.
- The process can be resource-intensive, demanding significant time and resources at each stage.
- The process can be rigid at times and not applicable to all projects.
Addressing Challenges
To address these challenges, ensure extensive planning and resource allocation before beginning the process. Always prioritize projects within the portfolio before undertaking a stage-gate process, and ensure alignment with stakeholders.
In some cases, you may want to blend the stage-gate approach with other methodologies, such as agile or scrum, for projects that demand greater flexibility. Finally, continuously review and reassess projects and processes.
How to Implement a Stage-Gate Process
Establish KPIs for the process, as well as objectives for each stage.
KPIs serve as the guiding principles for the project, but each stage should have different objectives. There should also be criteria for passing each gate.
Keep stakeholders involved.
Educate stakeholders and team members on the stage-gate approach to ensure stronger buy-in. Align stakeholders on individual stage-gate objectives and overarching project goals, ensuring alignment at every stage. This keeps everyone informed and on the same page.
Use PPM software.
Tools like Prism PPM allow you to track and evaluate progress across all projects. With project information viewable in one platform, you have visibility into project stages and key milestones.. Plus, it facilitates easier communication and collaboration with stakeholders.
Continuously refine.
Revisit your approach regularly. This is critical for effective project governance and for ensuring that your processes are working as designed. Solicit feedback from team members and stakeholders as part of this cycle of continual improvement.
PPM’s Role in Supporting Stage-Gate Decisions
So, what role should PPM software play in supporting stage-gate decisions?
Using PPM software, you can manage a large number of projects and better utilize resources, determining which projects to tackle when. For example, Prism PPM’s platform enables detailed project plans that roll up to high-level insights. Visibility into every project stage and status allows you to anticipate and make decisions at each gate. Plus, you can plan out project lifecycles and manage entire portfolios from a centralized location. This supports better, more contextualized decision-making, making project management more efficient and manageable.
When Should You Use a Stage-Gate Process?
The stage-gate process is ideal for projects that require strict control and demand careful planning, stakeholder involvement, and comprehensive risk management. Growing businesses, as well as large enterprises with many departments, executives, and teams, benefit from the structured framework.
However, it’s not an ideal approach for projects or organizations that require flexibility, when things are changing constantly. Those environments are better suited to agile methodologies. You can also use a blend of the two approaches to make the processes both manageable and flexible.
Conclusion: The Stage-Gate Process in PPM
The stage-gate process isn’t just about individual projects; it’s about strategic alignment. It is important to ensure that gate reviews aren’t just pushing the project itself forward but continuing to align with strategic goals. To that end, use the gates as a point to communicate and collaborate with team members and stakeholders.
Don’t simply assess deliverables; assess how well the project is continuing to fit into the bigger picture. Additionally, customize the framework to your needs. After all, different projects will require different approaches.
By implementing this model, you can revolutionize your organization’s project strategy, adapting the framework to your organization and its unique demands,
Prism PPM supports the stage-gate process, helping you improve efficiency, manage resources, and reduce risks. Book a 30-minute consult or a 60-minute demo today.