Know The Difference Between Work Intake Versus Stage-Gate

April 1, 2018May 27, 2020 Tim Washington 1 Comment

What is the difference between a work intake process and a Stage-Gate process? This is important to distinguish, especially for newer PMO’s that are setting up portfolio management processes.

Work Intake

The work intake process refers to the steps of developing a project proposal and bringing it to the governance board (or PMO) for a go/no-go decision. This process works in conjunction with Stage-Gate, but can also be a standalone process. When PMO’s are first established, an intake process needs to be defined so that the PMO can manage incoming project requests. Once the portfolio governance team is established and familiar with the intake process, a full Stage-Gate process should be developed.

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—employees will be unclear on how project proposals get brought forward, resulting in fewer project proposals from within the organization
Time delays—without a clear understanding of the process, project proposals may be unnecessarily delayed from being reviewed
Quality erosion—the quality of the proposals may erode and further delay the process since participants may not be aware of the information needed for project reviews.

In order to have a successful work in-take process, all of the roles and responsibilities of each participant in the process needs to be documented and communicated. Some questions that need to be answered include: who will write the proposal (project manager, business analyst, executive sponsor)? What information is needed? What templates need to be filled out? What format must the information be presented? Are there any IT systems that need to be utilized (e.g. SharePoint, portal, portfolio management system)? Are there any time constraints for submitting proposals? Is a presentation needed? Who will make the presentation?

Another important reason to establish a work in-take process is to help control the work in progress (WIP) within the organization. At one Fortune 500 company I worked with there was no “single entry” to the organization. Rather, requests came in through system managers, process engineers, subject matter experts, and other employees. It was nearly impossible to track all of the work being done because there was no “single source of truth”. A lot of shadow work was being done in the organization and it was very difficult to stop it because there was no established or enforced work in-take process. This shadow work eroded portfolio value, took valuable resources away from key projects, and was ‘death by 1000 cuts”.

Work in-take success factors:

Having a single “front door to the organization”
Clear roles and responsibilities of all participants in the work in-take process
Clear understanding of what information needs to be submitted
Clear communication about the templates and systems need to be used (if applicable)
Clear timetables for submitting requests and making presentations

Stage-Gate

Stage-Gates are a governance structure to evaluate, authorize, and monitor projects as they pass through the project lifecycle. Each gate represents a proceed/modify/hold/stop work decision on the part of the portfolio governance team. Although the Stage-Gate process parallels the project life cycle, the two are not exactly the same. For more information on the project lifecycle please see the Project Management Body of Knowledge Guide 6th Edition (PMBOK) by the Project Management Institute (PMI).

Stage-Gates are a critical component of project selection. A winning portfolio must contain winning projects, therefore the portfolio governance team 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 predetermined strategic criteria at each gate review of the Stage-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.

Conclusion

New PMO’s should start by establishing a work intake process to ensure there is one clear path for project requests to reach the PMO. Later, as the organization adopts the work intake process, a full Stage-Gate process can be added on to increase the quality of project proposals and help ensure the portfolio contains winning projects.

Improve Portfolio Health By Avoiding Two Portfolio Management Extremes

March 30, 2016November 19, 2018 Tim Washington Leave a comment

Two Simple Questions

You can measure your general portfolio health with two simple questions:

1) Do you approve all or almost all of your projects?

2) Are you approving so few projects that people would say you are “cutting to the bone”?

These are two portfolio management extremes that we will examine in this post.

Approving Everything is Bad

Question number one highlights a common trap for many companies, approving all or almost all projects that get reviewed. This indicates that the project selection process is not working well. When governance councils have a project approval over 90%, it means very few projects are getting screened out and some poor projects are probably getting approved. Approving nearly all projects also means that significant diminishing returns kick in for this group of projects and executing this work likely requires unnecessary multi-tasking and exceeding the resource capacity of critical resources. While it is theoretically possible for an organization to do an outstanding job of selecting the best possible project candidates upfront and still have a high approval rate, I doubt this occurs very often. More likely, organizations operate in a reactive mode and approve projects as they get proposed; since most projects look good by themselves and almost always have a good reason for getting initiated, the project gets approved and funded. Therefore, one of the best portfolio governance council metrics to measure portfolio health is the project approval rate. We can illustrate these concepts with the graphic below.

Portfolio Cumulative Frontier - Extreme 1 — **Portfolio Cumulative Frontier – Extreme 1**

Here we have a bounded curve of possible portfolios (in this case we can apply the cumulative frontier, which is the cumulative portfolio value based on the rank order of projects in the portfolio, not to be confused with the efficient frontier which is based on portfolio optimization). At the upper far right is the problem area in question. If organizations are approving most projects it means there is little to no discrimination among projects which is a symptom of not having enough project candidates to review and stems from poor ideation, work intake, and weak phase-gate processes.. When organizations have more project candidates than they can reasonably take on, the governance council is pushed to do a better job of selecting projects. Organizations can still do a poor job of selecting projects (or may simply ignore resource capacity and continue approving everything) even when they have more than they can take on, but the emphasis here is on increasing the project pipeline so that the governance council will become less reactive and more proactive and say no to projects that really should be screened out. Creating a strategic roadmap to identify important projects (top-down approach) combined with an employee ideation (process bottom-up approach) will help build up the pipeline of projects and increase the decision making rigor by the governance council.

Don’t Cut to the Bone

We can also evaluate portfolio health by looking at the other extreme where an organization is cutting costs so much that any further cuts will hurt the organization’s day to day operations (aka “cut to the bone”). In one place I worked, the cost-cutting measures had been in place for years and a number of good project candidates were hardly under consideration because funds simply were not available and a buildup of project requests was accumulating. A few high value projects got approved, but “money” was left on the table as a result of not taking action on those good project candidates. In some cases, the rigor to do a good cost-benefit analysis is absent and makes it difficult to communicate how much ‘value’ is being ignored by not taking on additional projects due to strong cost cutting measures. Such extreme cost cutting also has the negative residual effect of discouraging innovation among employees. We can also illustrate this with the same graphic.

Portfolio Cumulative Frontier - Extreme 2 — **Portfolio Cumulative Frontier – Extreme 2**

Summary

In short, asking simple questions about the approval rate of projects and the cost-cutting measures of an organization can highlight general portfolio health. In both cases, organizations should be pushing toward the middle. Adding more project candidates will help ensure that only the most valuable projects get approved. In the case of extreme cost-cutting, companies should improve their ability to measure project value in order to communicate the ‘value’ left on the table. This is best accomplished when a company is doing reasonably well and not when the company is truly in dire straits. Cutting costs “to the bone” is never a good way to stimulate innovation, therefore careful attention is needed when companies are cutting costs too much and not investing in the future.

Communicate Portfolio Value

January 26, 2015January 26, 2015 Tim Washington Leave a comment

I recently finished a project helping a CPG organization within a large retail company implement a product portfolio management process. The company as a whole tends to avoid developing business processes, but this CPG organization recognized the need for greater process discipline around its product pipeline and work in-take. Any endeavor to implement portfolio management can be difficult due to the organizational change component, but one factor that makes it easier is to communicate portfolio value.

Portfolio communication is a significant component of good portfolio management and often requires communicating along the four PPM lifecycle steps shown below:

However, as it relates to managing organization change, to communicate portfolio value is to communicate how the portfolio process benefits the organization. Success stories must be shared to reinforce how new changes should be welcomed and adopted.

Communicate Portfolio Value Through Success Stories

Within the first few weeks of the new process, a project manager told his peers that the work in-take processes actually helped him determine that a new product he was about to propose was not a good project after all. He elaborated by saying that the extra rigor required him to ask tough questions about the value of the project, which led him to the conclusion that his proposed product was not worth bringing to market! Prior to a product portfolio approach, numerous project managers would have brought forth new product ideas with little governance or oversight. Now, with greater scrutiny over new product proposals, it was easier to determine early on whether a product idea was worth going after or not. This kind of testimony should be widely circulated throughout the organization to help communicate the value of the portfolio process.

Another project manager approached me recently to share another success story about how his project team believed that making a change to a single product would result in a one-time costs saving of $100,000. However, as a result of the increased cross-functional collaboration required by the new Stage-Gate process, the project team discovered that these changes could be applied to an entire product line resulting in an annual savings of $1,000,000. This was a huge win for the team and is another success story to help the entire organization adopt the Stage-Gate/product portfolio process.

Summary

To communicate portfolio value is not just about communicating the value of the portfolio, or of the individual project components in the portfolio, it also involves communicating the value of the entire portfolio process. This creates positive momentum for helping organizations adopt new processes, resulting in greater success in the future.

Who in your organization manages portfolio communication? How effective is the portfolio communication at your company?

Effective Project Pipeline Management

August 27, 2013May 27, 2020 Tim Washington 3 Comments

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 three major sub-components to pipeline management: ideation, work intake processes, and phase-gate reviews illustrated in the figure below.

Ideation – The Starting Point of Pipeline Management

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.

Opportunity Management – The Backlog of the Project Pipeline

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.

Work Intake – The Entry Point of Project Pipeline Management

The work intake 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 phase-gate, but can also be a standalone process. When used with ideation and phase-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.

Phase-Gates

Phase-gates (also known as Stage-Gate™) are a critical component of project 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.

Pipeline Management and Portfolio Maturity

Pipeline management supports portfolio definition (as seen by ideation, opportunity management, work intake, and Stage-Gate) but also portfolio optimization in relation to project sequencing and project dependencies. Pipeline management is one component of healthy portfolio maturity and you should regularly assess the maturity of your portfolio management processes.

Portfolio Roadmaps

A common method for getting visibility of the active work in your pipeline is a portfolio roadmap. This tool will highlight when major initiatives start and stop and can further support work intake.

Effective Pipeline Management: Funnel or Tunnel

July 26, 2013May 27, 2020 Tim Washington 2 Comments

Project pipeline management is an important component of project portfolio management (PPM) and involves steps to ensure that an adequate number of projects are being evaluated and screened out at various stages of the intake process to meet strategic objectives. Other factors such as organizational budget and resource capacity also come into play so that the organization is not overloaded with work, which can be a risk factor for completing organizational and strategic goals.

Pipeline Management Question

The question you should ask yourself today is whether or not your organization’s project pipeline resembles a funnel or a tunnel. In theory, as projects pass through the work intake process, those that do not meet key criteria or are deemed of lower value should be screened out. This would cause the project pipeline to look more like a funnel (shown below).

Unfortunately, in reality, this is not often the case. I know of one large Fortune 500 company that killed three times (3x) more projects after they were authorized than when they were initially being evaluated. In this case, there is hardly a funnel, but more of a tunnel (shown below) in which most projects get approved. This can cause organizational chaos since more work is authorized than people have time to work (a capacity management issue). Good project pipeline management should evaluate governance decision making effectiveness to understand the rate of up front project approvals. When the portfolio governance team is approving more than 95% of projects, something needs to done to adjust decision making, otherwise project reviews are not effective.

In a future post we may explore success factors for managing the project pipeline, but for now it is sufficient to highlight two success factors: strong strategic leadership and clear screening criteria. When senior leaders can say “no” to projects for the right reasons, this will foster a leaner project pipeline and healthier project portfolio. Clear screening criteria make it easier for senior leadership to say no to misaligned projects, which requires a solid understanding of organizational goals and objectives.