Stage gates are a governance structure to evaluate, authorize, and monitor projects as they pass through the project lifecycle. In the last post, we looked at the first four reasons for establishing a stage gate process in the organization. In this post, we conclude with the last four reasons for establishing a decision gate process.
5) Greater visibility of important projects The stage 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 decision gate process, it is easy to lose track of projects, and even worse, shadow projects get approved without formal reviews, eroding portfolio value.
6) Monitor the progress/outcome of project work A stage 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 process. 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.
7) Improves communication throughout the organization Communication throughout the organization is improved and strengthened by providing greater visibility of projects in the stage gate process. By utilizing a common project language and having a consistent process, employees will better understand the work being done across the company.
8 ) Provides structure to the project management process Finally, the stage gate process provides structure for the project management process by determining a minimal set of project deliverables needed for gate reviews. Although the decision 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.
Do you have a decision gate process in your organization? How well is it working? Let us know.
Stage-Gates™ are a critical component of project selection. A winning portfolio must contain winning projects, therefore the project governance board must be able to discriminate between good projects and great projects. The decision gate process enables the project governance board to review these projects based on preselected strategic criteria at the gate reviews of the decision gate process. At each of those gates, important project information is provided to the project governance board to make a go/no-go decision related to the project. Without this mechanism, unnecessary or poorly planned projects can enter the portfolio and bog down the work load of the organization, hampering the benefits realized from truly important and strategic projects. There are eight reasons for developing a decision gate process, and Part 1 looks at the first four reasons:
1. Screen out misaligned projects
A Stage gate process functions as a filter to screen out poorly aligned projects. Every organization will have more projects than it can execute, which requires the PMT to carefully select which project enter the portfolio. Some projects may look good on paper but are completely misaligned from the organizational objectives and strategies. When organizations have well established evaluation criteria, decision gates are an excellent way of filtering out these misaligned projects.
2. Control the flow of incoming work
Stage gates are also a valve to control the number of projects entering into the portfolio. Even if every proposed project is a winner, the organization still has limited capacity to execute the work. Therefore, projects need to be initiated at the right time so that the organization is not overloaded with work. This process works in parallel with portfolio planning (discussed in the next chapter) to authorize projects at the right time.
3. Enables management to direct (steer) the scope of project work Stage gate reviews afford senior management an opportunity to direct the scope of projects. There will almost always be more than one way to execute a project. Mature and 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 PMT options when selection projects and does not force them into making “all or nothing” decisions.
4. Evaluate and prioritize workload Stage gate processes provide decision makers with project deliverables that contain key project information. The deliverables themselves ensure consistency in the process and helps ensure that a good project plan is in place. This information also directly feeds the prioritization process (which will be discussed in a later chapter). Without good project information, prioritization is inconsistent and poorly conducted. This information also helps the PMT commit the right resources to the right projects at the right time.
Project pipeline management is an important component of project portfolio management (PPM) because it encompasses the work needed to “select the right projects”. Pipeline management involves steps to ensure that an adequate number of project proposals are generated, evaluated, and screened out at various stages of the intake process that meet strategic objectives. There are four major sub-components to pipeline management: ideation, work in-take processes, and Stage-Gate™ reviews illustrated in the figure below.
Ideation is the process by which new project ideas are generated. This is slightly different from the work in-take process by which project requests are formally brought forward to a governance board. Ideation is important for collecting the best ideas from the organization, for collecting a sufficient number of project proposals to generate higher quality projects, and to maintain a healthy organization by engaging employees to submit their ideas.
2) Opportunity Management
Opportunity management complements ideation and further strengthens the project selection process. Some ideas may be great, but for one reason or another, the timing is not right or some other constraint makes the execution of the idea difficult or impossible. For this reason, organizations should establish a “parking lot” of good ideas waiting to enter the project pipeline. This parking lot is really a collection of all of the opportunities waiting to be captured. The processes for managing opportunities are similar to the processes for managing risks except that opportunities are future events that could produce positive outcomes for the organization. Opportunities often fall into the “should do” or “could do” categories, but enable organizations to achieve more or perform better than planned. Without an opportunity management process, organizations risk losing visibility of potentially beneficial future projects.
3) Work In-Take
The work in-take process refers to the steps of developing a project proposal and bringing it to the governance board for a go/no-go decision. This process works in conjunction with both ideation and stage-gate, but can also be a standalone process. When used with ideation and Stage-gate, the work in-take process helps bridge these other two processes together. The work in-take process is important so that all project proposals are created in a consistent manner with common tools and processes. The unintended consequences of not having a work in-take process include organizational confusion, time delays, and quality erosion.
4) Decision Gates
Decision gates (also known as Stage-Gate™) are a critical component of pipeline management. A winning portfolio must contain winning projects, therefore the portfolio management team (PMT) must be able to discriminate between good projects and great projects. The decision gate process enables the PMT to review these projects based on preselected strategic criteria at the gate reviews of the decision gate process. At each of those gates, important project information is provided to the Portfolio Management Team to make a go/no-go decision related to the project. Without this mechanism, unnecessary or poorly planned projects can enter the portfolio and bog down the work load of the organization, hampering the benefits realized from truly important and strategic projects.
Data represents a major facet of successfully implementing project portfolio management (PPM). In a previous post, I discussed how data drives the portfolio management engine and some of the key components for getting good data into the tool. Some important portfolio data types includes: financial data, resource data, schedule data, and benefits data. Leadership plays a pivotal part in the whole process from determining which data is needed to using the data for better decision making. This post will concentrate on the last part of the process—how to use the portfolio data.
Use the Portfolio Data
Data quality is never perfect at the beginning of a portfolio management process. Collecting data takes time and effort, and with so much demand on individual’s time, people do not want to waste time collecting data that is unnecessary or won’t be used. This is why it is so important for senior leaders to use the portfolio data. When leadership uses the data, they will understand what data is truly needed for higher quality decision making. Moreover, once the data gets used, the gaps in the data will be readily apparent and will give senior leaders an opportunity to reinforce the importance of the portfolio processes (that collect the data in the first place). However, using the data is only the first step in a three step process. Next, leadership needs to communicate that the data is being used.
Communicate that You Use the Portfolio Data
Communicating that the portfolio data is being used is a conscious effort on the part of the senior management team, but is something very easy to do. It can also easily be overlooked. Think about it. Project managers and resource managers can put data into the PPM system not knowing if it is simply going into a black hole or is actually helping the organization. Without communication, they may never hear whether the data is actually being used. A prime example occurs with resource data and capacity management. In order for capacity management to be successful, good data is needed, which takes a lot of effort by project managers and resource managers. If the project managers and resource managers do not believe that the data is actually being used, there will be less effort going forward in entering and maintaining the data. Even when an organization is mandated to use a PPM system, the data can be compromised by a small number of people who do not take the process seriously. Communicating that the data is being used is necessary for reinforcing the importance of the portfolio processes, yet senior leadership needs to take one more step—demonstrate how the data is being used.
Demonstrate How You Use the Portfolio Data
Communicating that the data is being used is good, but demonstrating how the data is being used is even better. This will send a clear message to the organization of how important it is to maintain accurate and up-to-date information in the portfolio system. If the data is being used to drive decisions around strategic project investments, staffing plans, bonuses, etc., then people will be more likely to spend the time to enter, update, and maintain the data. However, if the data is used to create a report that merely scratches the itch of a curious executive, then the people involved with the portfolio processes won’t have much interest in making sure that the data is accurate and up-to-date.
Using portfolio data, communicating that the portfolio data is being used, and demonstrating how the data is being used are the responsibilities of senior leadership. None of these steps are difficult, but need to be taken on a regular basis if the organization wants to be successful with portfolio management. Collecting data comes at a price, and if the data isn’t being used, it is better for the organization to stop wasting its time and focus on things that move the organization forward. A small amount of effort on the part of the senior leaders can go a long way toward making portfolio management successful and useful. Data is the fuel that runs the portfolio engine. Bad data will clog the engine; good data will help the organization sail forward. Using the data, communicating that the data is being used, and demonstrating how the data is being used will not only make the difference in being successful at portfolio management, it’s also smart business.
In a previous blog post, I commented on doing portfolio management ‘by hand’ to learn the processes before adopting a robust portfolio tool. In a recent discussion on LinkedIn, one consultant commented that this most successful PPM software implementations occurred when companies took a phased approach to ease in the new solution. The first phase involved simpler tools to allow the organization to become familiar with portfolio management, followed by the full implementation with the advanced PPM capabilities.
After reading this I felt that there was a lot of wisdom in such an approach. Firstly, it gives the organization time to develop their own portfolio processes without the burden of learning a new tool upfront. Secondly, it allows stakeholders (ie. Project managers, steering team, etc) to understand portfolio processes and be comfortable using them. Third, based on the early experience with project portfolio management, the organization will better understand their own requirements for a full fledged tool.
In a great article on IT Project Portfolio Management, Jonathan Feldman asks organizations to consider the problem they are trying to solve and start with high level data rather than getting too detailed. “If you know what the end goal is, you can start to quantify how close you are to that goal”. Great advice as this too points to the need for a phased approach to implementing portfolio management.
What are your lessons learned with your portfolio management implementations?
At a recent project/portfolio management event, there was a comment made about project managers managing ‘within the chaos’. This got me thinking about how portfolio management fits in with the chaos. Another distinction between project and portfolio management began to emerge; Project managers manage within the chaos, but good portfolio management helps manage the chaos. Let me explain.
Project managers are often given a task to make things happen and use as many project management tools as needed to execute a project. Project managers usually do not own their resources and have no direct influence over the types of projects being conducted, the project governance process, or the project priorities for the organization. Therefore, Project Managers need to learn how to best manage their projects in the midst of an ever-changing work environment (a.k.a. chaos).
Portfolio Management as a discipline can be used to help minimize the chaos within the organization. If leadership is proactive in developing good governance processes, then the organizational infrastructure will be established to accommodate the number and complexity of projects within the organization (I will touch on the need for good organizational infrastructure next month at Project World). Good project selection will help identify good projects as well as to balance the high-risk and low-risk projects being conducted at any one time. This is a big point to help manage the chaos. Too many risky projects translates into a lot of variability for project managers; and when Murphy strikes, it can have a huge negative ripple effect across the portfolio of projects.
Good prioritization will also identify the most important projects and help communicate to resources managers how to allocate their resources. Furthermore, solid resource capacity management will make a world of difference for project execution. Imagine having the right resources at the right time! Portfolio management will reduce organizational chaos to make project execution more successful when solid organizational infrastructure is put in place.
This post is a continuation of the previous book report on Patrick Lencioni’s book, Death by Meetings. He recommended four types of meetings, three of which are briefly discusses in relation to portfolio management.
2) Weekly tactical meeting: these meetings are focused on tactical issues of immediate concern. There should be discipline to this meeting and structural consistency. A quick lightning round allows everyone to share their top two or three priorities for the week. The next component is a review of key metrics without lengthy discussion. The third component is a real-time agenda, not one created prior to the meeting. Disciplined spontaneity is important for those leading the meetings who can allow the meeting to shape itself based on the most urgent matters.
PPM application: this meeting would allow project and program managers to provide quick status and then address current issues affecting their projects.
3) Monthly strategic meetings: allows managers to wrestle with, analyze, and debate important issues that affect the organization. It is important that they occur regularly so that it serves as a parking lot for strategic matters that get brought up in other meetings. “This gives executives confidence to table critical issues knowing that they will eventually be addressed.”
PPM application: These meetings are particularly relevant to the portfolio management team to actually discuss current strategies and provides time for them to develop clearer strategic criteria. These meetings could also be used for longer-range phasing plans for strategic completion.
4) Quarterly off-site: “provides executives an opportunity to regularly step away from the daily, weekly, even monthly issues that occupy their attention, so that they can review the business in a more holistic manner”. These off-sites should include a comprehensive strategy review, team review, personnel review, and even a competitive industry review.
PPM application: this get away allows the portfolio management team adequate time to consider the strategic direction of the organization and develop future goals.
Patrick Lencioni’s book, Death by Meetings, is a great book and relevant to the PPM community.
“Meetings are boring because they lack drama”
“Meetings are ineffective because they lack contextual structure”
Problem #1—Lack of drama
Meetings are interactive and relevant to our lives, yet they usually lack some amount of drama. “When a group of intelligent people come together to talk about issues that matter, it is both natural and productive for disagreement to occur. Resolving these issues is what makes a meeting productive, engaging, and fun.”
PPM application: portfolio management is both fun and exciting because it is the mechanism for accomplishing strategic initiatives. There are always ongoing changes that requires participants to be engaged, strategies to be clarified, priorities to be established and communicated, and projects to be executed. Keeping this view in front of the portfolio management team and project managers will help keep everyone focused.
Problem #2—Lack of Contextual Structure
The basic problem is that too many things are crammed into meetings and often frustrate many people for different reasons. Tactical near-term decisions may get added to the same agenda as longer-term strategic items. Nothing gets the attention it deserves, people don’t get to weigh in sufficiently and/or are not adequately prepared. The problem isn’t to necessarily spend more time in meetings as it is to break down the content for the appropriate meeting. To resolve the contextual structure issue, Lencioni advocates four types of meetings:
1) The daily check-in: this may be relevant for a leadership team or another group that does work closely together. It’s intent is to provide everyone a quick overview of the days events in five minutes or less (approximately).
PPM application: for organizations that are project focused, having such a meeting may help project managers and key team members stay on the same page with each other.