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Improve Your Simple Prioritization

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The standard approach for completing a simple prioritization in Decision Lens is to rank (1-N) the alternatives by Priority Value score, test these rankings under different assumptions about priority weights and perhaps ratings inputs, and produce a final prioritization list. All of this can be easily done in Sensitivity Analysis.

There is nothing wrong with this approach, as it is fast, clean, and simple. But it may not provide all of the insights to make the best decision. Keep in mind that Sensitivity Analysis produces a portfolio ranking based only on overall benefit (Priority Value) scores. If you have cost data for your portfolio, why not complete a benefit cost analysis of your portfolio, and factor it into the prioritization?

The usefulness of Resource Allocation in Decision Lens is not strictly limited to situations of resource scarcity, i.e. where project requests exceed available funding. Many organizations seek to prioritize based on a balanced perspective of business value and resource efficiency. It is very easy to facilitate this in Decision Lens. The key components include:

  • Sensitivity Analysis - Have stakeholders rate the portfolio to derive Priority Value (benefit) scores and portfolio rankings
  • Resource Allocation - Build a fully funded scenario to derive benefit cost (Value ROI) scores, then use Value-ROI Chart to visualize portfolio rankings by benefit - cost performance.
  • Import the VROI Index as an Alternative Metric - Import each project's VROI Index as a metric to display in Sensitivity Analysis and other visualizations to better "tell the story"
  • Visualize Benefit - Cost Relationships in the Bubble Chart - In situations where alternatives and costs vary significantly, you can use a Bubble Chart to recreate a VROI ranking, using alternative cost tiers or groups as alternative categories and visualizing them

If you have complete cost data:

  • If you have cost data for the entire portfolio, create a fully funded allocation scenario (resource pool = sum of all requests) to derive the Value ROI scores. Produce the Value ROI Chart to visualize this ranking for stakeholders.
  • Import the Value ROI scores as an alternative metric in the Alternatives list. Then in Sensitivity Analysis, display the metric column next to Priority Value scores. Sort the list by Priority Value score, then sort the list by the Value ROI metric (simply click the column header). Take screen shots for documentation.

  • If your alternatives have exhibit a wide range of costs or fall into logical groups, consider creating cost tiers as an Alternative Category and using them to segment the rankings. A good visualization for conveying cost peer comparisons is the Bubble Chart. Plot Cost on the horizontal axis and Priority Value on the vertical axis, using bubble color to denote alternative (cost) categories This will give stakeholders a better grasp of overall “bang for the buck” within peer groups of alternatives. The example below illustrates this. Note the peer group Value vs. Cost clusters based on bubble color.

If you have partial cost data:

  • If you have cost data for just a portion of the portfolio, enter the alternative costs as a portfolio metric in the Alternative list, and display the metric column in Sensitivity Analysis. In certain instances, cost can be applied as a “tie-breaker” for similarly ranked alternatives. You can also rank the portfolio by cost, looking at cost tiers and Priority Value Scores within these tiers.
  • If you do not have exact alternative costs, or your alternatives exhibit a wide range of costs, consider creating cost tiers as an Alternative Category and using them to segment the priority rankings. This will give stakeholders a better grasp of overall “bang for the buck” within comparable groups of projects based on cost.

 

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