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Gate 2
In the chapter on Gate 1, we discussed many important issues regarding gates in general,
and all the concepts recommended for meeting format apply to Gate 2 as well. As with
Gate 1, the Gate 2 meeting provides an opportunity to refine time lines and forecasts, as
the project requirements are now more detailed. Although some issues and information
needed for planning Stage 3 may still be difficult to foresee, overall uncertainties should
be reduced through prior experience and reassessment of processes that move the projects
from inception through backtesting. Like Gate 1, Gate 2 also prevents development of
the trading/investment system from moving to the next stage until the required activities,
deliverables, and performance have been completed and evaluated in a quality manner.
The product team should arrive at the gate meeting with its deliverables and a recom-
mendation supported by data. A recommendation to proceed to Stage 3 must of course
be accompanied by a request for additional resources. At the meeting, management will
review the recommendation and decide what course to take. We also recommend the head
of the risk department for the firm attend, so that risk managers can start mapping out
plans for K | V Stage 4 concurrent with Stage 3 activities. In order to pass through Gate 2,
several questions must be answered.● Do the gold standard in-sample and out-of-sample test results prove the competitive
advantage of the trading/investment system?
● Is the process stable? What are the performance metrics that are stable? The stability
of the system should be described using statistical process control. Included should
be SPC charts and C pk calculations between the in-sample and out-of-sample tests.
● Has the product team delivered the required documents?
● What are the current projections for time and budget for Stage 3? This should be
compared to the original projections.
● What is the product team ’ s plan for managing the development process and the
development team?
● Are the project and the software/hardware quality attributes technologically
feasible?
● Are the resources requested for implementation acceptable?
● Is the product team functioning as a team or does top management need to reform it?CHAPTER ◆ 18