This article describes what a stage gate analysis is and how it can be a valuable addition to the project manager's repertoire of project planning tools. It also looks at the various conventional stages in stage gate analysis as well as the potential outcomes of the stage gate analysis.
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Stage gate analysis is a technique that's used in new product development and processes in which decisions regarding the continuity of product development are taken at certain decision points termed "gates" between the various "stages" of the process – hence, the term Stage Gate Analysis.
All the new products developed by an organization may or may not be profitable. Hence, companies need to make intelligent decisions on which avenues to pursue and which dead-ends to write-off before investing too much money into the dead-ends.
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A Review of the Stages
The various stages given in the conventional model are
There are 5 stages and normally a gate after every stage. There is also a zeroth stage called Discovery (Ideation Phase) and a 6th stage called a Post-Launch Review.
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Factors Influencing the Decisions at the Gates
Quality Parameters - This refers to how well the project is being executed.
Business Sense / Economic Viability - This refers to the financial attractiveness of the project. Key metrics used are evaluating the ROI (return on investment) and the NPV (net present value) of the project in order to determine attractiveness.
Operational Feasibility - This refers to whether the resources are available, whether the project can be completed on time, whether any additional capability is required, etc.