Capital Projects

2Why the Stage-Gate Process Is the Best Tool Executives Can Use to Get the Most Value from Their Capital Projects

I was once presenting to the CEO of a medium-sized manufacturing company and his executive team on how they could improve the results of their capital projects. Some of their recent projects had not gone so well. About five minutes into the briefing, one of his lieutenants muttered, “Oh no—not another presentation about the stage-gate process!” “Well, yes,” I said, “that is a big part of what I am going to talk about.” He rolled his eyes and spent most of the time checking his e-mail on his phone while I talked. Yes, the stage-gate process is old hat, but the fact is it is the only approach that has ever been shown to work long term.

A more complete name is the stage-gate project development and delivery process (see Figure 2.1). The process contains five distinct stages with gates between the first three stages, which are referred to as the front end of the process. Each stage has a set of requirements for the work to be completed in that stage. That work is used by executives at each stage-gate to decide whether the potential benefit from the project justifies the expense for completing the next stage. The Define gate is the point in the process when executives authorize the full budget to complete the project.

Figure 2.1 Stage-Gate Project Development and Delivery ...