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Phased and Gated Project Life Cycle (PLC) Process for Product Development
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Phased and Gated Project Life Cycle (PLC) Process for Product Development

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Every company has a unique project Life cycle which is used as a tool for project management and tracking the product development projects. Project Life Cycle is a tool typically used to manage the......

Every company has a unique project Life cycle which is used as a tool for project management and tracking the product development projects. Project Life Cycle is a tool typically used to manage the projects from its inception till the product has been introduced into the market. This report describes the Phase-Gate Project Life Cycle for product development outlining formal PLC structure, PLC elements, gate review process and gate deliverables.

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  • 1. A research report onPHASED & GATED PROJECT LIFE CYCLE (PLC)PROCESS FOR PRODUCT DEVELOPMENTRaman K. AttriSubmitted Dec 2007Submitted to IGNOU University for MBA Dissertation in OperationsManagementR. Attri Engineering Management Series, Paper No. 5, Dec 2007Copyrights © 2007 Raman K. Attri. Paper can be cited with appropriate references and credits to author.Copying and reproduction without permission is not allowed.ABSTRACTEvery company has a unique project Life cycle which is used as a tool for project managementand tracking the product development projects. Project Life Cycle is a tool typically used tomanage the projects from its inception till the product has been introduced into the market. Thisreport describes the Phase-Gate Project Life Cycle for product development outlining formal PLCstructure, PLC elements, gate review process and gate deliverables.
  • 2. 1Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 2007SECTION-1PROJECT LIFE CYCLE (PLC)1.1 PROJECTSProjects are the way that most new work gets delivered. All projects have certain characteristics incommon. They all have a beginning and an end. Projects result in the creation of one or moredeliverables. Projects can be managed using a common set of project management processes. Infact, a similar set of project management processes can be utilized regardless of the type of project.All projects should be defined and planned and all projects should manage scope, risk, quality,status, etc. Project management, however, defines the overall management and control processesfor the project. At some point, you still need to define the actual activities necessary to execute theprojects. These activities are referred to as the project lifecycle.1.2 DEFINITION OF PROJECT LIFE CYCLEProject managers or the organization can divide projects into phases to provide better managementcontrol with appropriate links to the ongoing operations of the performing organization. Collectively,these phases are known as the project life cycle. The place to start when thinking about lifecyclemodels is the generic waterfall approach. This model provides the basic outline that can be used onany project. Basically you start off understanding the work that is expected, designing a solution,building and testing a solution and then implementing the solution. These common models arevaluable since they save project teams the time associated with having to create the projectschedule from scratch each time. However, depending on the characteristics of the project, otherlifecycle models may be more appropriate. Other important lifecycle models can be used toaccelerate projects with certain characteristics.1.3 CHARACTERISTICS OF THE PROJECT LIFE CYCLEThe project life cycle defines the phases that connect the beginning of a project to its end. Theproject life cycle definition can help the project manager clarify whether to treat the feasibility
  • 3. 2Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 2007study as the first project phase or as a separate, stand-alone project. The transition from one phaseto another within a project’s life cycle generally involves, and is usually defined by, some form oftechnical transfer or handoff. Deliverables from one phase are usually reviewed for completeness andaccuracy and approved before work starts on the next phase.There is no single best way to define an ideal project life cycle. Some organizations have establishedpolicies that standardize all projects with a single life cycle, while others allow the projectmanagement team to choose the most appropriate life cycle for the team’s project. Further, industrycommon practices will often lead to the use of a preferred life cycle within that industry. Project lifecycles generally define:• What technical work to do in each phase (for example, in which phase should the architect’swork be performed?)• When the deliverables are to be generated in each phase and how each deliverable is reviewed,verified, and validated• Who is involved in each phase (for example, concurrent engineering requires that theimplementers be involved with requirements and design)• How to control and approve each phase.Project life cycle descriptions can be very general or very detailed. Highly detailed descriptions oflife cycles can include forms, charts, and checklists to provide structure and control. Most projectlife cycles share a number of common characteristics:• Phases are generally sequential and are usually defined by some form of technicalinformation transfer or technical component handoff.• Cost and staffing levels are low at the start, peak during the intermediate phases, and droprapidly as the project draws to a conclusion. Figure 1-1 illustrates this pattern.
  • 4. 3Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 2007Figure-1.1: Sample Generic PLC• The level of uncertainty is highest and, hence, risk of failing to achieve the objectives isgreatest at the start of the project. The certainty of completion generally gets progressivelybetter as the project continues.• The ability of the stakeholders to influence the final characteristics of the project’s productand the final cost of the project is highest at the start, and gets progressively lower as theproject continues. Figure 1-2 illustrates this.Figure 1.2: Stakeholders’ Influence over Time
  • 5. 4Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 20071.4 CHARACTERISTICS OF PROJECT PHASESAlthough many project life cycles have similar phase names with similar deliverables, few life cyclesare identical. Some can have four or five phases, but others may have nine or more. The completionand approval of one or more deliverables characterizes a project phase. A deliverable is ameasurable, verifiable work product such as a specification, feasibility study report, detailed designdocument, or working prototype. Some deliverables can correspond to the project managementprocess, whereas others are the end products or components of the end products for which theproject was conceived. The deliverables, and hence the phases, are part of a generally sequentialprocess designed to ensure proper control of the project and to attain the desired product or service,which is the objective of the project.1.4.1 Sub phases in ProjectIn any specific project, for reasons of size, complexity, level of risk, and cash flow constraints,phases can be further subdivided into subphases. Each subphase is aligned with one or morespecific deliverables for monitoring and control. The majority of these subphase deliverables arerelated to the primary phase deliverable, and the phases typically take their names from thesephase deliverables: requirements, design, build, test, startup, turnover, and others, asappropriate.A project phase is generally concluded with a review of the work accomplished and thedeliverables to determine acceptance, whether extra work is still required, or whether the phaseshould be considered closed. A management review is often held to reach a decision to start theactivities of the next phase without closing the current phase.Formal phase completion does not include authorizing the subsequent phase. For effectivecontrol, each phase is formally initiated to produce a phase-dependent output of the InitiatingProcess Group, specifying what is allowed and expected for that phase, as shown in Figure 1.3. Aphase-end review can be held with the explicit goals of obtaining authorization to close thecurrent phase and to initiate the subsequent one. Sometimes both authorizations can be gainedat one review. Phase-end reviews are also called phase exits, phase gates, or kill points.
  • 6. 5Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 2007Figure 1.3: Typical Sequence of Phases in a Project Life Cycle1.5 REPRESENTATIVE PROJECT LIFE CYCLESFollowing project cycles have been chosen to illustrate the diversity of approaches in use. Each ofthese representative project life cycles has their own nomenclature of the phases and majordeliverables.1.5.1 Department of Defense Project Life Cycles:This is defense acquisition milestone PLC which is illustrated in Fig 1.4:-• Determination of mission needs – ends with concept studies• Concept exploration and definition – ends with concept demonstration approval• Demonstration and Validation – ends with development approval• Engineering and Manufacturing Development – ends with production approval• Production and Deployment- overlaps ongoing operations and support
  • 7. 6Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 2007Figure-1.4: Representative Project Life Cycle (DOD)1.5.2 Construction Project Life CycleMorris describes a construction project life cycle as illustrated in the figure 1.5 below:Figure-1.5: Representative Project Life Cycle (Construction)
  • 8. 7Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 2007• Feasibility: Project formulation, feasibility studies, and strategy design and approval. Ago/no-go decision is made at the end of this phase.• Planning and Design- base design, cost and schedule contract terms and conditions, anddetailed planning. Major contracts are let at the end of this phase.• Production – manufacturing, delivery, civil works, installation, and testing. The facility issubstantially complete by the end of this phase.• Turn-over and start-up: final testing and maintenance. This facility is in full operation at theend of this phase.1.5.3 Software Development Project Life CycleMeuench, et al describes a spiral model for the software development with four cycles and fourquadrants as illustrated in the figure 1.6:-Figure-1.6: Representative Project Life Cycle (Software)
  • 9. 8Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 2007• Proof of concept cycle- capture business requirements, defines goals for proof-of-concept,produce conceptual system design, design and construct the proof-of-concept, produceacceptance test plans, conduct risk analysis and make recommendations.• First build cycle- derive system requirements, define goals for first build produce logicalsystem design, design and construct the first build, produce system test plans, evaluate thefirst build and make recommendations,• Second build cycle- derive subsystem requirements, define goals for the second build,produce physical design, construct the second build, produce system test plans, evaluate thesecond build and make recommendations.• Final cycle- complete unit requirement final design, construct final build, perform unit,subsystem, system and acceptance tests
  • 10. 9Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 2007SECTION-2USE OF PROJECT LIFE CYCLE INPRODUCT DEVELOPMENT2.1 PROJECTS VS. PRODUCT“Projects” are the way that new work gets delivered. All organizations have projects. Projects canbe managed using a common set of project management processes. “Project management” refers tothe processes used to create or enhance the product. “Products” on the other hand, are tangibleitems that are produced by a project. If the product is temporary or has a short lifespan, we don’tnormally consider it a “product”. “Product management” is an approach for centrally coordinatingthe activities surrounding the inception, business case, development and the long-term support andenhancement of a product.You can think of product management as encompassing the full life cycle of the product. In theinception stage of the product, the idea is captured so that it can be explored more fully and productmanager Identifies opportunities for use of the product. The idea is then nurtured through thecompany’s business planning process to see if the idea can be funded. If the idea is never fulfilled,then the product management life cycle is very short. A project is started to build the product. Atthis point project management and product management overlap.2.2 PROJECT LIFE CYCLE & PRODUCT LIFE CYCLE RELATIONSHIPSSome organizations formally approve projects only after completion of a feasibility study, apreliminary plan, or some other equivalent form of analysis; in these cases, the preliminary planningor analysis takes the form of a separate project. For example, additional phases could come fromdeveloping and testing a prototype prior to initiating the project for the development of the finalproduct.
  • 11. 10Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 2007The driving forces that create the stimuli for a project are typically referred to as problems,opportunities, or business requirements. The effect of these pressures is that management generallymust prioritize this request with respect to the needs and resource demands of other potentialprojects.The project life cycle definition will also identify which transitional actions at the end of the projectare included or not included, in order to link the project to the ongoing operations of the performingorganization. Care should be taken to distinguish the project life cycle from the product life cycle.Figure 4.1 illustrates the product life cycle starting with the business plan, through idea, to product,ongoing operations and product divestment. The project life cycle goes through a series of phases tocreate the product. Additional projects can include a performance upgrade to the product. In someapplication areas, such as new product development or software development, organizationsconsider the project life cycle as part of the product life cycle.Figure 2.1: Relationship between product and the Project Cycles2.3 NEW PRODUCT DEVELOPMENT PROCESSIn business and engineering, new product development (NPD) is the term used to describe thecomplete process of bringing a new product or service to market. There are two parallel pathsinvolved in the NPD process: one involves the idea generation, product design, and detailengineering; the other involves market research and marketing analysis. Companies typically see newproduct development as the first stage in generating and commercializing new products within the
  • 12. 11Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 2007overall strategic process of product life cycle management used to maintain or grow their marketshare.2.4 STAGES OF NEW PRODUCT DEVELOPMENT PROCESSThere are several stages in the new product development process, not always followed in order:2.4.1 Idea Generationo Ideas for new products can be obtained from customers (employing user innovation),designers, the companys R&D department, competitors, focus groups, employees,salespeople, corporate spies, trade shows, or through a policy of Open Innovation.2.4.2 Idea Screeningo The object is to eliminate unsound concepts prior to devoting resources to them.o The screeners must ask at least three questions:Will the customer in the target market benefit from the product?Is it technically feasible to manufacture the product?Will the product be profitable when manufactured and delivered to the customerat the target price?2.4.3 Concept Development and Testingo Develop the marketing and engineering detailsWho is the target market and who is the decision maker in the purchasingprocess?What product features must the product incorporate?What benefits will the product provide?How will consumers react to the product?How will the product be produced most cost effectively?Prove feasibility through virtual computer aided rendering, and rapid prototypingWhat will it cost to produce it?2.4.4 Business Analysiso Estimate likely selling price based upon competition and customer feedbacko Estimate sales volume based upon size of market
  • 13. 12Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 2007o Estimate profitability and breakeven point2.4.5 Beta Testing and Market Testingo Produce a physical prototype or mock-upo Test the product (and its packaging) in typical usage situationso Conduct focus group customer interviews or introduce at trade showo Make adjustments where necessaryo Produce an initial run of the product and sell it in a test market area to determinecustomer acceptance2.4.6 Technical Implementationo New program initiationo Resource estimationo Requirement publicationo Engineering operations planningo Department schedulingo Supplier collaboration2.4.7 Logistics plano Resource plan publicationo Program review and monitoringo Contingencies - what-if planning2.4.8 Commercializationo Launch the producto Produce and place advertisements and other promotionso Fill the distribution pipeline with producto Critical path analysis is most useful at this stageThese steps may be iterated as needed. Some steps may be eliminated. To reduce the time thatthe NPD process takes, many companies are completing several steps at the same time.2.5 NEW PRODUCT DEVELOPMENT METHODOLOGIES
  • 14. 13Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 2007Many organizations have new product development methodologies that provide a standard frameworkfor planning and managing development efforts. The engineering development life cycle is a subsetof the overall product and process development cycle. The formal development effort may comeunder the definition, implementation, and testing phases as shown in Figure 2.2.Figure 2.2: Sequence of Phases for NPDThe development life cycle, shown here for a software project (using the old waterfall approach)shows the distinct activities that need to happen either in series, with overlaps, or iteratively using aspiral methodology.This figure 2.3 provides the framework for understanding the relationship between the majormilestones in the project approval process and the design reviews that are part of a normalengineering development methodology.Figure 2.3: Typical Waterfall Model for New Product Development in Software2.6 PRODUCT DESIGN PROCESS
  • 15. 14Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 2007Design is the process by which the needs of the customer or the marketplace are transformed into aproduct satisfying these needs. It is usually carried out a designer or engineer but requires help fromother people in the company. This means that the designer requires help from the other experts inthe company for example the manufacturing expert to help ensure that any designs the designercomes up with can be made. So what factors might a designer have to consider in order eliminatingiteration?• Manufacture - Can the product be made with our facilities?• Sales - Are we producing a product that the customer wants?• Purchasing - Are the parts specified in stock, or do why have to order them?• Cost - Is the design going to cost too much to make?• Transport - Is the product the right size for the method of transporting?• Disposal - How will the product be disposed at the end of its life?Design essentially is an exercise in problem solving. Typically, the design of a new product consists ofthe stages, as under shown in Figure 2.4:2.6.1 Design BriefThe design brief is typically a statement of intent. Although it states the problem, it isnt enoughinformation with which to start designing.Figure 2.4: Stages of Product Design2.6.2 Product Design Specification
  • 16. 15Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 2007This is possibly the most important stage of the design process and yet one of the leastunderstood stage. It is important that before you produce a solution there is a trueunderstanding of the actual problem. The PDS is a document listing the problem in detail.2.6.3 Concept DesignUsing the PDS as the basis, the designer attempts to produce an outline of a solution. Aconceptual design is a usually an outline of key components and their arrangement with thedetails of the design left for a later stage. However, the degree of detail generated at theconceptual design stage will vary depending on the product being designed.2.6.4 Concept generationTypically, designers capture their ideas by sketching them on paper. Annotation helps identifykey points so that their ideas can be communicated with other members of the company. Thereare a number of techniques available to the designer to aid the development of new concepts.2.6.5 Concept evaluationOnce a suitable number of concepts have been generated, it is necessary to choose the designmost suitable for to fulfil the requirements set out in the PDS. The product design specificationshould be used as the basis of any decision being made.2.6.6 Detail designIn this stage of the design process, the chosen concept design is designed in detailed with all thedimensions and specifications necessary to make the design specified on a detailed drawing ofthe design. It may be necessary to produce prototypes to test ideas at this stage. The designershould also work closely with manufacture to ensure that the product can be made.2.7 GATE REVIEW/ DESIGN REVIEW IN PRODUCT DESIGN PROCESS2.7.1 Gate ReviewsGate review is the first mechanism in the management-oriented review occurring at the end of alogical project phase. This type of review is referred to as a gate review, phase-gate review,phase review or phase approval. This review assesses that the project is worthy of continuationand that risks are manageable. It approves the expenditure of resources to continue with the
  • 17. 16Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 2007project. The term "gate" implies that the project must go through this step in order to continueon. The typical timing of phase-gate reviews is shown in the project phase diagram Figure 2.5.Figure 2.5: Gate ReviewsThe management team that conducts these reviews usually stays constant across all projects tobring consistency to the review process and to maintain a comparative perspective amongprojects so that they better recognize the good projects and the projects that are in trouble. Thephase-gate reviews should have well-defined entry criteria, review objective and agenda for eachreview. When companies start with an ill-defined process or lack any type of phase-gate reviews,"hard" gates are usually established. This means that the review must be successfully conductedbefore the program proceeds. When a well-disciplined development process is in place anddevelopment personnel are used to gate reviews, the organization is positioned to move to "soft"gates. Soft phase-gate reviews allow the project to proceed in parallel with conducting thereview, thereby reducing time-to-market.2.7.2 Design ReviewsThe second mechanism is a technically-oriented design review. There are typically several typesof design reviews that occur at different points in the new product development process. Thesedesign reviews are placed at a point in the process where there has been development of someaspect of the product or process design that should be assessed before the project continuesbased on those technical decisions. These reviews are intended to provide an independentassessment of the documented requirements for the new product, the concept of the newproduct, the design of the new product, the process design to manufacture and support the newproduct, or the readiness to put the new product into production. Design reviews, while
  • 18. 17Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 2007technically focused, are not limited to just the design of the product. They must address all thelife cycle requirements of the product as well as the program requirements such as cost,schedule and risk.
  • 19. 18Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 2007SECTION-3PHASE-GATED PROJECT LIFECYCLE (PLC)3.1 CONCEPT OF PHASE-GATE PLC AND GATE REVIEW PROCESSThe answer to improving control over these projects is a phased commitment strategy, more commonlyknown as phase gate development. A phase gate development strategy is based on common sense: Dontmake a commitment when you dont have enough information to support it. Instead, make a series ofdecisions to move forward and at each decision point make it legitimate to re-scope or cancel theproject.Most product development organizations have deployed some form of Phase-Gate and Gate Reviewprocess to provide structure to their projects, yet many struggle to achieve the full benefits that such aprocess can offer. Effective product development results from effective risk management. One of thefundamental objectives of an effective Gate Review process is to reduce project risk as rapidly aspossible as a basis for deciding whether to continue investing in the development project or not. Thisshould be done with the minimum possible expense and with the lowest possible administrative effort.Figure 3.1: Project Risk vs Expense over the life of the project
  • 20. 19Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 2007The management team should provide a check and balance on the project teams efforts to manageinternal risk, and, more importantly, their role is to manage external or higher level risks, e.g., the riskthat the project deviates from the strategic business objectives, the risk that this project takes resourcesaway from higher priority projects, etcIt is therefore necessary to define points in the project timeline where the management team engageswith the project team to assess risk against both internal and external criteria and make a decision to a)proceed, b) cancel the project, c) place the project on hold, or d) request additional work in the currentphase. These points occur where there are decision points about major commitment of resources:proceeding with detailed development, investing in tooling, investing in launching a new product, etc.3.2 DEFINING PHASES AND GATES OF THE DEVELOPMENT PROCESS3.2.1 PhasesThere are some logical, high level risk reduction tasks/activities that can be used as the basis fordefining the phases of the product development process. The names that are given in the Table 3.1to the phases are somewhat arbitrary but the defining tasks must be performed in the correctsequence in order to consistently achieve the minimum development time.Table 3.1: Phase DefinitionPhase Defining TasksIdea Capture and rank the idea against strategic prioritiesInvestigation Assess readily available data to better quantify the opportunity. Recheck for alignmentwith strategic objectives and relative priority against other projects.Feasibility Select the product concept based on customer needs, competitive solutions, productcost, product quality, and technical risk tradeoffsDevelopment Develop the product and manufacturing or service process (detailed design)Pilot/Launch Verify the manufacturing or service process. Introduce the productProduction/DeploymentRamp up production volumes and refine manufacturing process to achieve cost andquality goals or deploy and refine the service3.2.2 Gates
  • 21. 20Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 2007Between each of the phases is a management assessment event where the project is evaluatedagainst specific criteria to determine if the project should proceed. This is shown in Figure 3.2. Thisgives us a framework for managing our projects and sets up the timing for the gates.Figure 3.2: GatesNote that the transition from Idea to Investigation is not defined as a gate. The screening andapproval to move into the Investigation phase is generally managed by a subset of the gate reviewteam and is therefore defined as a separate event. As the teams prepare for and execute gatereviews, there is a specific set of information or criteria that the management team must be able toassess as the basis for the gate decision. Getting the right information into the gate review process iscritical to achieving the ideal risk/expense profile.The final, fundamental requirement of using a phase gate strategy is to understand what must occurat each gate and who is responsible for it. A mature gated development model uses consistent gatesfor similar projects. Each gate consists of three components:• Required deliverables--what the project team will be asked to present at that decision point.These deliverables will change as the project progresses through development.• Gate criteria--a known set of questions for judging whether the project should proceed.• Specific outputs--what is the purpose of the gate? If it is to approve the next phase of theproject, then an outcome should be a formal approval &action plan or budget for the next phase.Passing a gate is a decision made by the projects owner--the organization that is funding the projectand will benefit from its result. The owner weighs the proposed scope and benefits against theestimated project cost, delivery schedule and risks. At each successive gate in the developmentprocess there should be more evidence to support each of these elements. The project team andproject manager are responsible for supplying the estimates that make up the business case and forproviding the evidence of their progress. That evidence takes the form of system developmentoutputs such as documented requirements, system architecture, detailed designs, test results, etc.
  • 22. 21Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 2007At each gate, there are several legitimate outcomes including carrying on with the original projectgoals; adjusting the triple constraint of cost, schedule and scope; or project cancellation. If theproject carries on as originally envisioned that means nearly all previous assumptions are beingconfirmed as the work progresses.3.3 GATE CRITERIAThe fundamental criteria for assessing a project at a gate review are the same at every gate. However,the degree of scrutiny and rigor that is applied to those criteria must be consistent with the informationthat can be reasonably captured in the phase preceding the current gate.Table 3.2: Gate CriteriaMarket Attractiveness Is the market well defined? Substantial? Growing? Can competitive advantage can beachievedCustomer Value Are customer needs understood and addressed by the product? Does the productprovide unique benefits and a compelling value proposition?Technical Risks Is the product technically feasible? Do we have, or can we acquire the neededknowledge & expertise? Is it reasonable to close the technical gap within a productdevelopment effort? Is the complexity and technical risk can manageable?Market Risks Can the product advantages can be effectively communicated? Is the productconsistent with sales channel desires and expectations? Can the projected marketshare be achieved through the defined sales channels? What is the risk of ourcompetitive advantage being undermined by the time the product is launched?Financial Return Is the projected financial return adequate? How likely are we to achieve the neededfinancial return?Regulatory Risks How challenging is the regulatory environment? What is the likelihood of newregulatory requirements that negatively impact the product?Strategic Alignment Does the project fit with the product line and business strategy? Do we have thenecessary core competencies? Does the project support a balanced project portfolio?Is the project priority high enough to justify resource assignment?Table 3.3 suggests the level of information that would be expected at each gate, reflecting anevolving focus as project data is collected, analyzed and interpreted.Table 3.3: Suggested Gate InformationCriteria Gate 1 Gate 2 Gate 3 Gate 4Market Preliminary market Full market definition with Update to market definition, size/growth
  • 23. 22Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 2007Attractiveness definition, market size andmarket growth estimatesbased on data that could beacquired without fundedmarket research;preliminary assessment ofcompetitive landscape andtrends based on availableliterature, web sites etc.credible data to supportmarket size/growth estimatesand the baseline forecast;thorough assessment ofcompetitive landscape andtrends and implications to theproject.estimates and forecast based on any newinformation collected; updates to competitivelandscape and trends as applicableCustomer Value Preliminary assessment ofcustomer needs based ondata that could be acquiredwithout funded marketresearch; preliminaryassessment of competitivesolutions and opportunity fordifferentiation; preliminaryidentification of productconcepts; preliminaryproduct requirements.Firm product requirementsbased on credible set of databased on VOC investigation,competitive benchmarking andtechnical tradeoff analysisincluding DFM/A assessments.Compelling value propositionestablished.Update to product requirements based on newinformation. Assessment of ability to meetrequirements based on development activities.Technical Risks High risk areas ofpreliminary productconcepts identified.Technical data indicates thatthe selected concepts for boththe product andmanufacturing/service processdesigns are feasible.Prototype test dataindicates conformance tokey specs with adequatemanufacturing margins.All significant technicalrisks have beenaddressed. Manufacturingrisks are identified. Themanufacturing/serviceprocess appears to beviable.Data from earlyproduction runsindicates that theproduct can bebuilt at theprojected volume,cost and qualitylevels. The productis fully validated.Allmanufacturing/serviceprocess/infrastructure issues resolved.Market Risks Preliminary sales channelstrategy identified.Likelihood of achievingprojected sales volumesassessed for this channelstrategy. Preliminaryprojection of competitivesituation at time ofintroduction.Sales channel strategy is firm.Likelihood of achievingprojected sales volumes re-assessed for this channelstrategy, based on channelinput. Projection ofcompetitive situation at timeof introduction.Customer feedback onprototype units supportsproduct strategy. Updateto channel strategy andforecast based on latestdata. Strategy forcommunicating productadvantage to both channeland end users defined.Product launchpreparation is complete.Launch planupdate. Earlyfeedback fromcustomers indicatesproduct acceptanceand launch planeffectiveness.Product supportinfrastructure is inplace.Financial Return Preliminary estimate of thefinancial return (returnFirm target cost established.Likelihood of achieving targetBottoms-up estimate of product cost isconsistent with targets. Financial return
  • 24. 23Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 2007factor, NPV and breakeventime, etc).cost assessed. Financial returnupdated based on salesforecast.(return factor, NPV and breakeven time, etc)updated based on bottoms-up cost estimateand latest sales forecast.Regulatory Risks Preliminary assessment ofapplicable regulatorystandards.Full assessment of applicableregulatory standards.Update based on new data or regulations.Strategic Alignment Fit with the businessstrategy and corecompetencies; supports abalanced project portfolio;high enough priority tojustify resource assignment.Fit with the business strategy;fit with core competencies;supports a balanced projectportfolio; high enough priorityto justify resource assignment.Fit with the business strategy is high enoughpriority to justify resource assignment.3.3.1 Gate Review PreparationThe gate review criteria shown in Table 3.3 imply a set of tasks that the team must execute in thepreceding phase of the project. It is helpful to define the development process to include the tasksthat should be performed in each phase of the project as shown in the task plans. As the team workstheir way through a project phase they may uncover some information that seriously threatens theprojects viability. If so, they should immediately call a management update meeting where theywould make recommendations to either change the project charter or cancel the project. This actionis more likely to occur in the early stages of the project, but could occur later under somecircumstances. The key here is to kill unattractive projects as quickly as possible. Assuming this isnot the case, when the team approaches the end of a given phase, they will need to assess theproject against the gate criteria3.3.2 Project Evaluation against Gate CriteriaA project scoring methodology can be used to help the gatekeepers to assess projects against thesecriteria. An example of project scoring is shown below in Figure 3.3.
  • 25. 24Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 2007Figure 3.3: Project Scoring Table3.3.3 Gate Review TimingThere are different approaches that can be used to organize around gate reviews. One approach is toconsolidate gate reviews for several projects and hold them periodically, say once per month. Theadvantage of this approach is that the managers only have to plan to be available on one day permonth to support the gate review process. However, this approach has some significantdisadvantages. First, in a large organization, these meetings will become very long and difficult tomanage as team after team present their gate review content and/or project updates, some of whichwill run late even in the most disciplined organizations. Second, this approach causes delays byforcing a gate review to occur at the next available gate review date. With monthly reviews, thisdelay could be up to 4 weeks and can add up over several gates through the project lifecycle. It islikely that project work will continue through this delay period, but in the event that the project iscancelled or redirected, the work may be wasted.Another approach is to hold gate reviews on a project by project basis as needed. This has theadvantage of minimizing project delays but can make scheduling managers more challenging. Acompromise is to use a weekly or bi-weekly format - to block off time on the gatekeepers schedules
  • 26. 25Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 2007for the same time every week for gate reviews.3.4 THE GATE REVIEW MEETING - A TWO STEP PROCESSThe first part of the gate review process is to assess whether the project should continue based on itsown merits. The second step is to assess whether the project has high enough priority relative to otherprojects to justify continuing. The second step is a key component of effective portfolio managementi.e. managing the overall project stack against the business objectives. This is shown in Figure 3.5.Figure 3.5: Gate review as Two Step ProcessThe gatekeepers/approvers may cover both decisions in the gate review meeting or may make thesecond step decision subsequent to the gate review meeting. In the case of the latter, the decisionshould be made within one business day to avoid potential waste.3.5 GATEKEEPERSThe review and approval team is comprised of the senior managers that have profit and lossresponsibility for the affected product lines, have responsibility for defining the business plan and overallproduct development strategy and have the authority to commit resources to the projects. The teamshould include members with strong backgrounds in product development strategy, product marketing,product technology/capability, manufacturing process technology/capability and finance. Risk is inherentin the process and must be systematically reduced across all risk areas (business/marketing risk,technical risk, financial risk). Excessive, selective focus on risk reduction in one of these areas relative tothe others can undermine the gate review process and might actually increase overall project risk. It isrecommended that a process expert play the role of facilitator to help guide the managers to managerisk effectively under the structure of the process, until the organization has mastered the process.
  • 27. 26Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 2007
  • 28. 27Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 2007REFRENCES1. Fifer, Barbara and Soderberg, Vicky. Along the Trail with Lewis and Clark. Helena, MT:Farcountry Press, 1998.2. Boehm, Barry, et. al. Cost Models for Future Software Life Cycle Processes: COCOMO 2.0. UpperSaddle River, New Jersey: Prentice Hall, 1995.3. Cooper, Robert G. "Stage-Gate New Product Development Processes." Ed. Eric Verzuh. ThePortable MBA in Project Management. New York: John Wiley & Sons, 2003. (pp. 320-321)4. Fifer and Soderberg, Ibid.5. Project Management Book of Knowledge 2005. Project Management Institute USA. www.pmi.org6. Project Life Cycle, http://www.tensteppb.com/2.1ProjectLifeCycle.htm7. Phase gate development for project management—part IV, CHIPS, Winter, 2004 by Eric Verzuh8. Book of New Product Development: NPD. www.npdsolutions.com9. Phase and Gated Project Life Cycle:http://findarticles.com/p/articles/mi_m0OBA/is_1_22/ai_n6134862/pg_210. Project Life Cycle and New Product Development: www.wikipedia.com11. Six Sigma Knowledge Base, www.isixsigma.com
  • 29. 28Copyright © 2007 Raman K. Attri R. Attri Engineering Management Series, Paper No. 5, Dec 2007Author Details:Author is Global Learning and Training Consultant specializing in the area of performancetechnology. His research and technical experience spans over 16 years of project management,product development and scientific research at leading MNC corporations. He holds MBA inOperations Management, Executive MBA, Master degree in Technology and Bachelor degree inTechnology with specialization in Electronics and Communication Engineering. He has earnednumerous international certification awards - Certified Management Consultant (MSI USA/ MRAUSA), Certified Six Sigma Black Belt (ER USA), Certified Quality Director (ACI USA), CertifiedEngineering Manager (SME USA), Certified Project Director (IAPPM USA), to name a few. Inaddition to this, he has 60+ educational qualifications, credentials and certifications in his name. Hisinterests are in scientific product development, technical training, management consulting andperformance technology.Contact: +44 20 7979 1979E-mail: rkattri@rediffmail.comWebsite: http://sites.google.com/site/ramankumarattriLinkedIn: http://www.linkedin.com/in/rkattri/ Copyright InformationWorking paper Copyrights © 2005 Raman K. Attri. Paper can be cited with appropriate references and credits to author. Copyingand reproduction without permission is not allowed. Any collaboration, project work, dissertation discussions and consultingenquiry on subject matter is welcomed.