Investors and boards interested in developing a new project but concerned about making sure their money is being spent well have a common dilemma.
Most of the major companies and utilities with a regular stream of large projects like the oil companies and mining conglomerates and many of the heavy industrial companies have a stage gate process for their major projects. These projects represent a significant investment for the company (often many billions of dollars), so the boards and senior executives mandate a process by which project teams must stop at key milestones in the project, present their case, and ask for permission from the board to proceed.
Although somewhat inefficient and disruptive to project development, the stage gate process has become a standard process for mega projects undertaken by the major industrial companies in the Fortune 500. It is a way for the investors to maintain some control (or sense of control) over the capital development process. The standard gates developed by the likes of the Construction Industry Institute (CII), AACE International, Project Management Institute (PMI) and other independent companies such as IPA, have strong basis and are well documented, they are however, not panaceas. The stage gate process is not infallible. There are hundreds (perhaps thousands) of examples of projects that despite having navigated the organizations’ gates and hurdles successfully, still fail to deliver on the benefit, cost and schedule originally promised.
Companies and organizations with the best mega project track records have experienced, trusted people in key roles throughout the project team down into the details, able to monitor, track and lead the project to success. Many use a streamlined gated process to ensure accountability and transparency within the team and to give the board and investors some comfort and assurance that the project is on track. As with any investment, the best assurance of success is doing the homework and having trusted confidants with an understanding of the overall strategy manage the details.