The Stage Gate Process for Program Management A Survival

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					The Stage-Gate Process for Program
Management
  A Survival Guide for Project Managers
       through Two Case Studies
The Pain
                             s
 •Problems managing a company’portfolio
  of projects:
   •Projects with no clear priority hierarchy
   •Non-value projects go on and on
   •Too many “  small” projects eat up resources,
    energy, and attention
   •Resources are over- or under- committed

                 res o ur c es
        It’
        “ s the economy, stupid”
 An
• operational road map for moving a
 project from conception to completion.
•The process is broken down into a set
 of predetermined stages and gates.
Stages - Where the work is done.
  •Stages consist of a set of activities which are:
     ◦Predetermined
     ◦Cross-functional
     ◦Parallel
Gates - Where the decisions are made.
  •Present at the entrance to each stage.
  •Serve as both:
     ◦                        Am
      Quality control point –“ I doing the project right?”
     ◦                      Am
      Go/Kill checkpoint –“ I doing the right project?”
•Originally developed by Dr. R.G. Cooper in the
 mid-1980s.
•Between 1990 and today, utilization has grown
 from ~45% to over 75%.
    •This includes the development in the mid-1990s of an
     accelerated Stage-Gate methodology for lower risk
     projects.

Stage-Gate is a trademark of R.G. Cooper Associates Consultants Inc., a
   member company of the Product Development Institute Inc.
The Stage-Gate Process - Stages
   Idea
                 •Discovery Stage (Stage 0)
   Stage 11
    Stage          •Active process for idea development
 Preliminary
  Preliminary
Investigation
 Investigation     •Idea capturing and handling
                 •Stage 1: Preliminary
                  Investigation –
                   •Perform a preliminary market, technical,
                    financial and business assessment.
                   •Develop an action plan for the next stage.
The Stage-Gate Process –Stages (cont’
                                    d)

   Idea
                 •Stage 2: Detailed Investigation –
   Stage 11
    Stage          •Build the business case.
 Preliminary
  Preliminary
Investigation
 Investigation     •Do the up-front homework to define and
   Stage 22
    Stage           justify the product/project.
   Detailed
    Detailed
Investigation
 Investigation
                   •Develop action plans for subsequent
  Stage 33
                    stages.
   Stage
Development
 Development     •Stage 3: Development –
                   •Design and development of the product.
                   •Develop operations and manufacturing
                    processes.
                   •Develop plans for product launch.
The Stage-Gate Process –Stages (cont’
                                    d)

                 •Stage 4: Testing & Validation –
   Idea


                   •Verify and validate the product.
   Stage 11
    Stage
 Preliminary
  Preliminary
Investigation
 Investigation     •Verify marketing information
   Stage 22
                   •Finalize operations, launch and life-cycle
    Stage
   Detailed
    Detailed
Investigation
 Investigation      plans.
                 •Stage 5: Launch –
  Stage 33
   Stage
Development
 Development

  Stage 44
   Stage
                   •Full commercialization of the product.
 Testing &
  Testing &
 Validation
  Validation
                   •Full production and commercial launch.
  Stage 55
   Stage
  Launch
   Launch
The Stage-Gate Process –Gates
   Idea          Gate
                  1
                           • Gate 1: Idea Screen –
   Stage 11
                              • Does the idea merit any further work?
                           • Gate 2: Second Screen –
    Stage
 Preliminary
  Preliminary
                              • Is an extensive investigation justified?
Investigation
 Investigation    Gate
                   2
   Stage 22
    Stage
   Detailed
                           • Gate 3: Decision to Develop –
    Detailed
Investigation
 Investigation    Gate
                              • How sound is the business case?
                           • Gate 4: Decision to Test -
                   3

  Stage 33
   Stage
Development
 Development
                              • Should the product be moved into test?
                           • Gate 5: Decision to Launch -
                  Gate
                   4
  Stage 44
                              • Are we ready for commercial launch?
   Stage
 Testing &
  Testing &
 Validation
  Validation      Gate
                   5
                           • Post-Launch Review -
  Stage 55
   Stage
                              • Performance vs. Projections
  Launch
   Launch
                  Review      • Lessons Learned
                 •Determine if the project is being
   Idea



                  executed in a quality fashion
   Stage 11
    Stage
 Preliminary
  Preliminary
Investigation

                      Doing the project right”
                      “
 Investigation
   Stage 22
    Stage


                 •Where non-value projects are
   Detailed
    Detailed
Investigation
 Investigation

  Stage 33
   Stage
Development
 Development
                  weeded out
  Stage 44
   Stage
                      Doing the right project”
                      “
 Testing &
  Testing &
 Validation
  Validation

  Stage 55
   Stage
  Launch
   Launch
   Idea

   Stage 11
                 •Deliverables (Inputs)
    Stage
 Preliminary
  Preliminary
Investigation
                   •Predefined and consistent across projects
 Investigation
   Stage 22
                    allowing for objective analysis
    Stage
   Detailed
    Detailed
Investigation
 Investigation
                 •Criteria (Tools and Techniques)
  Stage 33
   Stage           •Understandable and relevant
                   •Make use of available/ obtainable
Development
 Development

  Stage 44
   Stage            information
 Testing &
                   •Able to discriminate good projects from
  Testing &
 Validation
  Validation

  Stage 55
   Stage            non-value projects
  Launch
   Launch
                                   d)
                              (cont’
   Idea
                 •Criteria (cont’
                                d)
   Stage 11
    Stage           A
                   ◦ checklist of deliverables
 Preliminary
  Preliminary
Investigation
 Investigation     ◦Criteria is more than just financials
   Stage 22
    Stage           (NPV, ROI, ECV, payback, …)
   Detailed
    Detailed
Investigation
                      –Alignment with strategy
 Investigation
                      –Product competitiveness
  Stage 33
   Stage
Development
                      –What is the market size, growth, and
 Development
                       competitiveness
  Stage 44
   Stage              –How feasible is the product technically
 Testing &
  Testing &            (complexity, uncertainty)
 Validation
                      –Alignment with core competencies
  Validation

  Stage 55
   Stage               (technical, operational, marketplace)
  Launch
   Launch
                                d)
                           (cont’
                 •Outputs
   Idea

   Stage 11

                   ◦Decision
    Stage
 Preliminary
  Preliminary
Investigation
 Investigation
   Stage 22
    Stage              Go,
                     – Kill, Hold, Recycle
   Detailed

                   ◦Approved action plan
    Detailed
Investigation
 Investigation


                   ◦Agreement on deliverables and
  Stage 33
   Stage
Development
 Development

  Stage 44
   Stage
                    date for next gate
 Testing &
  Testing &
 Validation
  Validation

  Stage 55
   Stage
  Launch
   Launch
Why Stage-Gate?
 Addresses the pain:
   •Provides objective and consistent criteria for
    prioritizing projects
   •Provides objective mechanism for making Go/Kill
    decisions
   •Subjects ALL projects to the same criteria,
    controlling the influence of many “ small”   projects
   •Chooses the right projects and effectively applies
    available resources to valuable efforts
Impacts on the Project Manager
•Project team is responsible for the integrity
 and objectivity of the data provided to the
 gate decision
•Project team becomes responsible not just
 for completing the project, but also for the
 impact of the project on the organization
                       Stage 1
Idea      Gate      Idea/Concept
                                   Gate
           1        Development     2



       Stage 1 Deliverables -
       •Charter/Problem Definition
       •Initial Cost Benefit Analysis
       •Phase 2 Resource Estimate
                            Stage 1
Idea         Gate        Idea/Concept
                                            Gate
              1          Development         2

                         Project Team
                         Project Team              Stage 2
                           Assigned
                            Assigned            Planning/Initial
    Scope,
     Scope,                                    Design/Business
  Schedule and
  Schedule and                                      Case
   Governance
   Governance
               Business
                Business
              Requirements
              Requirements

  Systems
  Systems                    Cost/Benefit
                             Cost/Benefit
  Analysis
  Analysis                    Analysis
                               Analysis

              Business
              Business
                Case
                Case
                    Stage 1
Idea    Gate     Idea/Concept
                                Gate
         1       Development     2


Stage 2 Deliverables                   Stage 2
                                    Planning/Initial
 Project Scope                    Design/Business
 Business Requirements                 Case

 Systems Analysis
                                        Gate
 Business Case (including               3
  Cost/Benefit Analysis)
 Stage 3 Cost Estimates
                     Stage 1
Idea     Gate     Idea/Concept
                                     Gate
          1       Development         2

Stage 3 Deliverables                          Stage 2
                                           Planning/Initial
•Developed Product                        Design/Business
                                               Case
•Quality Assurance Testing
•Stage 4 Cost Estimates
                                               Gate
 and Revised Benefits                           3
                              Stage 3
                            Development
                         Stage 1
Idea       Gate       Idea/Concept
                                         Gate
            1         Development         2


 Stage 4/5 Deliverables -                         Stage 2
                                               Planning/Initial
 Pilot (Limited Client Implementations)       Design/Business
                                                   Case

 Rollout
                                                   Gate
                                                    3
       Stages 4/5
       Stages 4/5   Gate          Stage 3
         Pilot/
          Pilot/
        Rollout
                     4          Development
         Rollout
StageGate Decision Making Process

          Benefits vs. Costs?

         Is Funding Available?

        Fit with Strategic Goals?

       Are Resources Available?

       Impacts on Other Projects?
Case Study –Project A
•Portfolio –Operational Efficiency
•Gate 2 Estimate - $1.4 million
•Stage 2 Authorization - $250K
•Problem Statement
  Generating and reconciling outbound data files is
   a manpower intensive operation. Prior to this
   project, 84 FTEs involved in processing
   outbound files.
•Project Goal   (coming out of Gate 2)   - ???
Case Study –Project A (cont’
                           d)

Scope
  Initial scope --identified as an investigation
    into areas of potential savings/efficiencies
  Detailed scope -- delayed until after
    investigation of process
Case Study –Project A (cont’
                           d)

Stage 2 Approach
Map the operation, identify areas for
  automating process, and evaluate the
  automation of each area in light of
  potential cost savings
Case Study –Project A (cont’
                           d)



  •Project Manager
  •Business Analyst(s)
  •Systems Reps
  •Business (Operations)
Case Study –Project A (cont’
                           d)

•Business Requirements Gathering –
 actually an investigation into process map
•Results
  Identified 8 areas of potential savings to address
    with automation
  Proposed 8 semi-autonomous sub-projects to
    address these areas
Case Study –Project A (cont’
                           d)
Business Case/Cost Benefit Analysis
•Benefits estimated both Bottom Up and Top
 Down
Bottom Up”
“         Estimate
 Determine the personnel
                                   $/hr
                                    $/hr
 involved and their rate
 Estimate % of work that
                                    %
                                    %
 could be automated
 Estimate Level of Effort for
                                Hrs/Element
                                Hrs/Element
 individual elements
  Determine repetitions for
                                 Number
                                 Number
  each element
 Identify individual
                                 Element
                                 Element
 elements of each process
Data Sources
     •Time Reports
     •Observations
     •Interviews
     •Operational Reports
     •Labor Rates
Top
“ Down”Estimate
   Assumes a Re-engineered Operation
      Map a New Process
      Map a New Process
     assuming automated
     assuming automated
          elements
           elements

                      Determine Level of
                       Determine Level of
                    Effort for each Element
                    Effort for each Element

    Determine Manpower
    Determine Manpower
    Requirements for Re-
    Requirements for Re-
    engineered Process
     engineered Process
Information Sources
•Reengineered Service Model
•Management
Case Study –Project A (cont’
                           d)
Business Case/Cost Benefit Analysis
• Benefits estimated both Bottom Up and Top Down
•Costs Estimated Bottom Up
Cost Elements
  Systems                     Business Ops
   •Development               • Re-Organization
   •Testing                   • Training
   •Support                   • Transition
Case Study –Project A (cont’
                           d)
CBA also needed to account for delivery time of
  subprojects
  Subproject    Delivery         Benefit Starts
      A          Month 6    Immediate –Start Month 7
      B          Month 8    Phased –Months 8-10
      C          Month 9    Phased –Months 9-12
      D         Month 12    Phased –Months 12-15
Gate 3 Determination
Project Estimates
•Initial (Gate 2) - $1.4M
•Revised (Gate 3) - $3.1M


•NPV (4 years) –$1.2M
•Savings/year (after full implementation) - $2M
Stage-Gate
Designed for Waterfall Methodology

   Stage 1
   Stage 1

             Stage 2
             Stage 2

                       Stage 3
                       Stage 3

                                 Stage 4
                                 Stage 4

                                           Stage 5
                                           Stage 5
Subproject 1                            Stages 3 / 4
    Stage 3 Activities                    Overlap
Design    Development         Testing


         Stage 4 Activities         Training    Pilot



Subproject 2
    Stage 3 Activities

    Design               Development             Testing


                   Stage 4 Activities                   Training   Pilot
Case Study –Project A (cont’
                           d)

Lessons Learned
•Important to have a level playing field for
 comparing projects’value
•Stage-Gate is a flexible process that allows
 projects to proceed if value can be proven
 and fits within company goals
Case Study –Project B
•Portfolio –Operational Efficiency
•Gate 2 Total Project Estimate - $2.5 million
•Stage 2 Authorization - $350K
•Problem Statement
  Significant effort is expended to reconcile data
    because of a design “  feature”with the
    processing system. Complaints are being heard
    from numerous sources indicating a large
    problem.
•Project Goal   (coming out of Gate 2)   - ???
Case Study –Project B (cont’
                           d)

Scope
  Initial scope --identified as an investigation
    into areas of potential savings/efficiencies
  Detailed scope -- delayed until after
    investigation of process
Case Study –Project B


  •Re-designing the data handling
   system would be an immense
   undertaking and outside the scope
Standard Approach (Stage 2)
                  Systems Analysis
                  Systems Analysis
Business Reqs.
Business Reqs.                         Gate
                       Business Case   Gate
                       Business Case    33
Standard Approach (Stage 2)
                       Systems Analysis
                       Systems Analysis
Business Reqs.
Business Reqs.                                      Gate
                             Business Case          Gate
                             Business Case           33



Revised Approach
                                             Gate
                                             Gate
Business Reqs.
Business Reqs.       Business Case
                     Business Case            33

          Systems Analysis
          Systems Analysis
Case Study –Project B (cont’
                           d)

  Project Team
  •Project Manager
  •Business Analyst(s)
  •Systems Analysts
  •Business (Operations)
Case Study –Project B (cont’
                           d)

Data Gathering
  •Difficulty of getting data
  •Problem lay within a subset of approx 2.4
   million yearly transactions, but no ready way
   to determine the number of problematic
   transactions
  •Gathered “  sample”   data from subset of clients
   for analysis and extrapolation to full client set
Case Study –Project B (cont’
                           d)

Results
•Of 2.4M transactions/year, < 20k exhibit
 this issue (<1%)
•Financial impact –Approx. $240k/year
•No significant resulting customer service
 issue
Case Study –Project B (cont’
                           d)

Recommendation
•Kill the project
Results
 No
• tangible results
•Expended considerable funds
Case Study –Project B (cont’
                           d)



  •Proved there was no significant
   issue with system “feature”
  •Additional spending on project
   without real merit was avoided
Case Study –Project B (cont’
                           d)

Lessons Learned
•Let the data be your guide and be objective
                                        failure”
•Killing a project is not necessarily a “
Final Observations
PM Perspective
  •Doveryay, no Proveryay (Trust, but
   verify)
  •View the process as a dialog, not an
   ordeal
 Questions/Comments/Discussion


NE Project Management Consultants

        www.nepmc.com
           1-866-86NEPMC
References/Suggested Readings
 Cooper, R.G. (July/August 2000). Doing it Right –Winning with New Products. Ivey Business
    Journal.
 Cooper, R.G., Edgett, S.J., & Kleinschmidt, E.J. (2000). New Problems, New Solutions: Making
    Portfolio Management More Effective, Research Technology Management, 43(2).

 Cooper, R.G., Edgett, S.J., & Kleinschmidt, E.J. (2002). Optimizing the Stage-Gate Process: What
    Best Practice Companies are Doing –“ 1”Research Technology Management, 45(5).
                                            Part .

 Cooper, R.G., Edgett, S.J., & Kleinschmidt, E.J. (2002). Optimizing the Stage-Gate Process: What
    Best Practice Companies are Doing –“ 2”Research Technology Management, 45(6).
                                            Part .

 Cooper, R.G., Edgett, S.J., & Kleinschmidt, E.J. (December 15, 2001). Portfolio Management for
    New Products (2nd ed.). New York: Perseus Books Group
 Cooper, R.G. (June 2001). Winning at New Products: Accelerating the Process from Idea to
    Launch (3rd ed). New York: Perseus Books Group
 http://www.prod-dev.com

 http://www.stage-gate.com