Phase Gate
A review at the end of a phase to decide on continuation or termination.
Detailed Explanation
A phase gate is a review at the end of a project phase where a decision is made to continue to the next phase, continue with modification, or terminate the project. It is a formal governance mechanism that ensures projects remain aligned with organizational strategy and deliver expected value.
At each gate, the project is evaluated against predetermined criteria: Is the business case still valid? Are deliverables meeting quality standards? Is the project within acceptable cost and schedule variances? Have risks changed significantly?
Phase gates prevent organizations from continuing to invest in projects that no longer make business sense. They are sometimes called stage gates, toll gates, or kill points. While they may seem like overhead, they protect organizations from the sunk cost fallacy — throwing good money after bad.
Key Points
- Formal decision point at the end of each phase
- Decisions: continue, continue with changes, or terminate
- Evaluates business case validity, quality, cost, and schedule
- Prevents continued investment in failing projects
- Also called stage gates, toll gates, or kill points
- Key governance mechanism for portfolio management
Practical Example
A pharmaceutical R&D project has 5 phase gates: Concept, Feasibility, Development, Testing, Launch. At the Feasibility gate, a panel of executives reviews the business case, early test results, regulatory feasibility, and market analysis. They approve continuation but redirect the formulation approach based on early findings, saving an estimated EUR 2M in development costs.
Tips for Learning and Applying
Define gate criteria before the project starts for objectivity
Include diverse perspectives in the gate review panel
Be willing to terminate projects — that is the gate's purpose
Update the business case at each gate with latest information
Want to Master These Concepts?
Our courses cover all these terms in depth with practical examples and exercises.