using stages and gates to keep projects & portfolios healthy

APMG-International Webinar

Using Stages and Gates to keep your

Projects and Portfolios Healthy

Tuesday 10 September 2013 / 11:00 EDT

Presented by Alan Boyce SOMOS Consulting Group

www.APMG-International.com

2013.09.10 Using Stages and Gates in Projects and Portfolios v.28 1

Agenda

• Welcome & Introduction

– David Smyth, Marketing Manager – Canada

APMG-International

• Using Stages and Gates to keep your

Projects and Portfolios healthy

– Alan Boyce

• Q&A

• More Information

• Close


Presenter: Alan R. Boyce

• Senior Management

Consultant and Trainer

• Consulting, Delivery,

Management

– Projects

– Programs

– Portfolios

– Operations

– Technology

• Over three decades adapting

best practices

– Addressing real-life customer

problems

– Achieving business results

• Direct Experience

– Information Technology

– Product Development

– Software Development

– Telecommunications

– Aerospace and Defence

– Life Sciences and Research

B.A.SC., MBA, P.ENG., PMP, CMC, P2P, MOP


SOMOS Consulting Group

• Management and Technology

Consulting

• Customers include

– Governments

– IT Organizations

– Aerospace and Defence

• Practice Areas

– Management Consulting

– Project and Portfolio Management

– Information Technology Services

• Accredited Consulting & Training

Organization (ACO & ATO)

– PRINCE2®, MSP®, MoP®, P3M3®

– First in North America

• An SEB Company since 2013

1990 1995 2000 2005 2010 2015

In Business

Consulting Practice Started

Training Practice Started

First PRINCE2® Training First North American Accredited

Consulting Organization (ACO) Microsoft Partnership

Accredited Training

Organization (ATO)

Acquisition by

SEB Inc.

Acquisition of

QLogitek, Inforica


Objectives and Overview

• Objectives

– Gain a basic understanding of

the control processes of

Stages and Gates

• Outline

– Origins

– How Stages and Gates Work

– Relation to PRINCE2 and MoP

– Adapting Stages and Gates to

an Organization

– Conclusions


Origins of Stages and Gates in Projects


Too much independence can become out-of-control

Motivations

Unlimited ideas

Optimism and best intentions

Executives want to know a status and progress

Managers need some independence to manage

Projects that are failing should be cancelled

Managers want to make good decisions

Limited funds, resources, time

Things don’t always work out as expected

Determining a project’s real status can be challenging

Easy to be carried away by a project’s inertia

Natural to avoid tough decisions


Structure and Processes for Good Decisions

• Strategic Decisions

– Project Approval / Cancellation

• Operational Decisions

– Measuring Progress

– Adjust Expectations and Plans

– Make Adjustments

• The Resulting System Should

– Enable decisions based on

facts and evidence

– Support clear decisions and

communications

– Be successful with imperfect

or incomplete information

– Allow informed decisions

before a significant investment

– Integrate naturally with the

natural flow of the project

– Require little additional effort

from the delivery teams


Evolution of Practice of Stages and Gates

Common Sense

• Walk then run

• Test the waters

Structured Development

• SDLC

Stage-Gate® Process

• Formalized

• Dr. Robert Cooper

Wider Adoption

• PRINCE2®

• MoP®


Phased Tests

• Prototype

• Market test

How Stages and Gates Work


• Slice the effort into Stages

– Discrete chunks of work

– Logical breaks where

performance can be seen

• Establish clear decision points

or Gates at each Stage end

• At each Gate

– Evaluate the on-going viability

– Decide to approve next Stage,

or change it, or cancel

– Resources and funds released

only for the next Stage

The Basic Process


Rationale

• Project expenditures typically

follow the S-Curve

• Our understanding follows the

same curve

– Project challenges

– Team Capability

– Validity of assumptions

• Decisions to cancel made early

mean less is discarded

$


$

$

$

$

$

$ $

Why Both Stages and Gates?

• Stage spans a period of time

– Starts only if Gate authorizes

– Investment is limited to the

budget for the Stage

– Tasks are performed

– Performance is measured

– Future Stages are re-planned

• Not simply a time-slice

• Gate is a point in time

– Managers’ decision point

– Review status at end of Stage

– Assess the on-going viability

– Compare with other demands

• One of two outcomes

– An initiative may continue

– Or it may not continue

• Not simply the end of a Stage


Investment Decisions Funnel


What the Gates Really Mean

Some projects

are sent back

for rework


Some projects

are cancelled!

How the Stages Relate to Funding


Stage 1 (Concept)

Stage 2 (Evaluation)

Stage 3 (Planning)

Stage m (Delivery)

Stage n (Delivery)

G1 G2 G3 Gm

Project Mix Over Time


Projects

In Delivery

In Third Stage

(Planning )

In Second Stage

(Evaluation)

In First Stage

(Concept)

T0 T1 T3 T2

When Stages and Gates Go Bad


Without Gating


T0 T2 T3 T4 T5

Rethinking The Gate


Relation to PRINCE2 and MoP


Application in Portfolio and Project Decisions

• Portfolios

– Investment Board manages

the strategic allocation of

resources between projects

– Many go/no-go decisions are

made before project starts

– After project starts, few

decisions regarding go/no-go

– Day-to-day decisions

delegated to the PM

• Projects

– Project Manager manages

with the resources allocated to

the project

– Decisions made outside the

project to start or terminate it

– After project starts, periodic

go/no-go decisions are needed

– After project starts, PM’s

decisions are made daily


Stages and Gates in Projects and Portfolios

Portfolio Delivery / MoP Portfolio Definition / MoP

Project Execution / PRINCE2


Practices within Management of Portfolios (MoP)

Management

Control

Portfolio Definition Portfolio Delivery

Categorize

Prioritize

Balance

Plan

Understand

Benefits

Management

Financial

Management

Risk

Management

Stakeholder

Engagement

Organizational

Governance

Resource

Management


Balance

Using Gates During Portfolio Definition

• Rank candidate initiatives

– Financial analysis

– Risk in delivery

– Expected benefits

– Political considerations

• Ensure portfolio is balanced

– Strategic objectives

– Interdependencies

– Timelines

– Available resources

– Wide consultation

Portfolio Definition

Categorize

Prioritize

Balance

Plan

Understand


Using Gates During Portfolio Delivery

• Most practices during Portfolio

Delivery involve control gating

• Tolerance limits and escalation

paths are established

• Costs of initiatives are

measured against budgets

• Supply and demand of

resources are managed

• Benefits are re-forecast

• Business cases are updated

Management

Control

Portfolio Delivery

Benefits

Management

Financial

Management

Risk

Management

Stakeholder

Engagement

Organizational

Governance

Resource

Management


Principles of PRINCE2

TAILOR

TO SUIT PROJECT

ENVIRONMENT

LEARN FROM

EXPERIENCE

CONTINUED

BUSINESS JUSTIFICATION

DEFINED ROLES

AND RESPONSIBILITIES

FOCUS

ON PRODUCTS

MANAGE BY

STAGES

MANAGE BY

EXCEPTION

PRINCE2 PRINCIPLES

TAILOR

TO SUIT PROJECT

ENVIRONMENT

LEARN FROM

EXPERIENCE

CONTINUED

BUSINESS JUSTIFICATION

DEFINED ROLES

AND RESPONSIBILITIES

FOCUS

ON PRODUCTS

MANAGE BY

STAGES

MANAGE BY

EXCEPTION

PRINCE2 PRINCIPLES


Gates within PRINCE2 Processes

Directing

Managing

Delivering

Pre- Project

Subsequent Delivery Stage(s)

Final Delivery Stage

Initial Stage

Start Up

Directing a Project

SB

Initiating

SB CP

Controlling a Stage Controlling a Stage

Managing Product Delivery Managing Prod Del


Adapting Stages and Gates to an Organization


Information Technology

• Long-standing desire for better

management control

• Many opportunities to identify

Stages and Gates

• Requires that the real accom-

plishments are understood

• Requires that tough decisions

are made

• Supported by SDLC (System

Development Life Cycle)

– Stages align with development

stages

• Equally valid when applied in

Agile environment

– Number of iterations is

estimated

– Stages align with an iteration

or release of the code

– Gate to allow evaluation of

progress at each release


Product Development

• Structure of work often lends

itself to Stages and Gates

– Design

– Prototype

– Build

– New Product Introduction

• Always a challenge to estimate

time for creative activities

– Establish larger tolerances

during planning

– Reviews and decisions should

still happen at Gates


Decision-Averse Organizations

• Problem

– Not making a decision

– Slow decision-making

– Reluctance to cancel projects

– Making a decision not based

on facts and data

• Effect

– Exacerbates resource

shortages

– Hard on the team

• Lack of integrity

• Wasted time and effort

• Strategies

– Have good information ready

to support decisions

– Show the cost of no decision

– Make recommendations

– Implement the decisions


Project is Viable Project is Not Viable

Sustain

the

Project

Cancel

the

Project

Good Decision

Poor Decision

Type I Error

Poor Decision

Type II Error

Good Decision

Extremely Flat Organizations

• Problem

– This is a strategic tool

• Not for daily decisions

• Effect

– When made too visible to

team, it can

• Waste effort

• Cause angst

• Lead to protective behaviours

• Lead to confusion

• Strategies

– Separate the management

roles

• Investment decisions

• Project Delivery

– Use Gates for strategic control

• Allowing the project to

proceed or not

– Use project milestones for

tactical control

• Day-to-day project progress


Conclusions


Conclusions

• Using Stages and Gates can

result in more efficient spend of

project dollars

– Ensuring that go/no-go

decisions are made

– Culling weak projects before

significant expenditure

– Cancelling projects that have

strayed out of bounds

– Resources and funds can be

redirected to other initiatives

• To be effective, Stages and

Gates must be applied properly

– Set Stages to include logical

groups of activities

– Make the required decisions at

the Gates

– Base the decisions on

measurements and facts

• PRINCE2 and MoP incorporate

these Best Practices


A cancelled project should not be considered a failed project, but a good decision

QUESTIONS & ANSWERS


More Information

• APMG-International

– www.APMG-International.com

• PRINCE2®

– www.prince-officialsite.com

• MoP®

– www.mop-officialsite.com

• SOMOS Consulting Group

– www.SOMOS.com

– [email protected]

• Cooper, Robert G., Winning at

New Products.

• McGrath, Michael E., Setting

the PACE in Product

Development.

http://www.linkedin.com/company/apmg-international @APMG_Inter


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http://www.prince-officialsite.com/



http://www.mop-officialsite.com/



http://www.agilekrc.com/

mailto:[email protected]

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http://www.amazon.com/Winning-New-Products-Accelerating-Process/dp/0738204633/ref=pd_bbs_sr_1/103-3574671-7510215?ie=UTF8&s=books&qid=1180033681&sr=1-1

http://www.amazon.com/Winning-New-Products-Accelerating-Process/dp/0738204633/ref=pd_bbs_sr_1/103-3574671-7510215?ie=UTF8&s=books&qid=1180033681&sr=1-1

http://www.amazon.com/Setting-Product-Development-Cycle-time-Excellence/dp/075069789X/ref=sr_1_1/103-3574671-7510215?ie=UTF8&s=books&qid=1180033607&sr=8-1



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