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shown here purposely simplify the example.) A curve is included in thefigure to indicate the amount of discovery remaining in the project.It should make sense that early in the project there will be much morediscovery remaining than at the latter phases.How many decision points are required depends on the clarity ofthe project scope. In the earlier example of extending a local areanetwork to another part of an office building, it seems realistic thattwo gates would be sufficient: The initial go-ahead and a review basedon a detailed design and estimate. For the other example — improvingbattlefield communication — many gates will be requiredas the team clarifies both the goal (how will we know communicationis improved?) and proposes various methods of delivering thecapability.Understanding the GateThe final, fundamental requirement of using a phase gate strategy isto understand what must occur at each gate and who is responsiblefor it. A mature gated development model uses consistent gates forsimilar projects. Each gate consists of three components: 3♦Required deliverables — what the project team will be asked topresent at that decision point. These deliverables will change as theproject progresses through development.♦Gate criteria — a known set of questions for judging whether theproject should proceed.♦Specific outputs — what is the purpose of the gate? If it is to approvethe next phase of the project, then an outcome should be aformal approval and action plan or budget for the next phase.Passing a gate is a decision made by the project’s owner — the organizationthat is funding the project and will benefit from its result.The owner weighs the proposed scope and benefits against the estimatedproject cost, delivery schedule and risks. At each successivegate in the development process there should be more evidence tosupport each of these elements. On complex IT projects there is seldoma single person who represents all of the owner’s interests, so asteering committee performs this function.The project team and project manager are responsible for supplyingthe estimates that make up the business case and for providing theevidence of their progress. That evidence takes the form of systemdevelopment outputs such as documented requirements,system architecture,detailed designs, test results, etc.At each gate, there are several legitimate outcomes including carryingon with the original project goals; adjusting the triple constraintof cost, schedule and scope;or project cancellation. If theproject carries on as originallyenvisioned that meansnearly all previous assumptionsare being confirmed asthe work progresses.Managing RiskProjects that are barelyscoped often turn out to betwo to four times as expensiveas originally estimatedbecause as they progresstheir scope gradually increasesor we find them to bemore difficult than initiallyenvisioned. The gate deci-DiscoveryRemaining30 CHIPS Dedicated to to Sharing Information*Technology*Experiencesions are opportunities to look at the facts gathered so far and determineif the project should be scoped up or down, and to assessthe reality of the current budget and schedule. Note that in Figure 2each gate is described as a business case review, emphasizing thatthe real decision at each gate is whether the evidence at hand supportsthe assumptions that make this project a good investment.Here’s an example of how a phase gate strategy keeps projects ontime and on schedule: If a project’s initial estimate is $50,000, but itsrevised estimate at completion of design is $150,000,the project teamand the project owner have choices — if they choose to carry onand the project completes for $150,000 then it should be consideredon budget! In other words, the baseline for measuring performanceshould not be the initial estimate based more on assumptionsthan facts. Rather, consider the baseline to be reset at eachphase gate. To do it any other way would be like the family that decidedto spend $50,000 on remodeling their house, heard from boththe architect and builder that their ideas were easily going to cost$150,000, yet forged on and complained upon completion that theproject was three times their original budget. Performance baselinesshould not be confused with wishes!The other legitimate option at a gate is project cancellation. Thoughmost project teams are disappointed when their project is canceledat a phase gate, it is not necessarily a sign of failure. In fact, cancelingprojects can be a sign of success.Even in an ideal IT organization — where everyone is smart andknows how to do their job well — we’ll still have projects canceled.That’s because we must and should take business risks. We can initiateprojects with thorough planning, using all our best estimatingtechniques, yet we lack a crystal ball to clearly forecast the future.Recall the earlier example of the pharmaceutical companies that findonly 1 of 1,000 compounds turn into a marketable drug; if they hadno canceled projects they would either have 999 unmarketable drugsor no drugs at all. Canceled projects are a sign that an organizationis willing to try something new, yet is carefully managing its investments.Another valid reason to cancel a project in our ideal IT organizationis that as we make progress on several projects, a new, more valuable,more urgent project can arise. If all current projects are evaluatedat regular gated intervals it will be apparent, which is the bestcandidate to cancel so resources can be redirected toward an investmentwith a better return. In reality, we make mistakes due to ignoranceand incompetence so it is even more important that we scrutinizeevery project repeatedly. That is why I originally referred toGateExecutives evaluate the proposed cost, schedule,scope, risk and benefits.Requirements Design ConstructionFigure 2. Phase gates in the development cycleOperate