Portfolio Scorecard Methodology

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Information about Portfolio Scorecard Methodology

Published on September 10, 2009

Author: stevelewin

Source: slideshare.net

Description

An approach to using quantitative and qualitative analysis to prioritize initiative in a resource constrained environment.

Steve Lewin 10 September 2009

Analyze Benefits Analyze Barriers Determine Time Criticality Assign Weighting Score Initiatives Prioritize Initiatives Assess Individual Initiative vs. Hurdle Reassess initiative performance

Analyze Benefits

Analyze Barriers

Determine Time Criticality

Assign Weighting

Score Initiatives

Prioritize Initiatives

Assess Individual Initiative vs. Hurdle

Reassess initiative performance

High Low High Major Initiatives “ Low-Hanging Fruit” Low Non-justifiable Secondary Initiatives Barriers (CSF’s, Costs, External Risks) Benefits (Quantifiable, Subjective, Intangible)

High Low High Major Initiatives “ Low-Hanging Fruit” Low Non-justifiable Secondary Initiatives Barriers Benefits Rewards & Risks can change over time (note initiative A to A’). Time A A’

Quantifiable Incremental Revenue / Market Share ROI Profit Improvement Productivity Improvement Cost reductions Cost avoidance

Quantifiable

Incremental Revenue / Market Share

ROI

Profit Improvement

Productivity Improvement

Cost reductions

Cost avoidance

Tangible / Non-Quantifiable Regulatory compliance Quality improvement Customer Satisfaction increase Service Level Improvement Cycle Time improvement Intangible Environmental impact Public relations (external image) Employee satisfaction

Tangible / Non-Quantifiable

Regulatory compliance

Quality improvement

Customer Satisfaction increase

Service Level Improvement

Cycle Time improvement

Intangible

Environmental impact

Public relations (external image)

Employee satisfaction

Critical Success Factors Data Collection Technological Feasibility System Implementation Organizational Support Management Commitment Cost or Difficulty of Implementation External Risk Factors Competitor actions Economic conditions Obsolescence

Critical Success Factors

Data Collection

Technological Feasibility

System Implementation

Organizational Support

Management Commitment

Cost or Difficulty of Implementation

External Risk Factors

Competitor actions

Economic conditions

Obsolescence

Sensitivity to: Market Share implications Risk as a factor of timing Calendar implications Competitor initiatives Workload result on delivery Coincidental product and service introductions Econometric variables

Sensitivity to:

Market Share implications

Risk as a factor of timing

Calendar implications

Competitor initiatives

Workload result on delivery

Coincidental product and service introductions

Econometric variables

Use Relative Index (0-1) Utility application by consensus Select “key” measures for initiatives Develop Analytical Hierarchy of Performance Measures Adapt for Management priority Identify Mission-critical vs. “Nice-to-have”

Use Relative Index (0-1)

Utility application by consensus

Select “key” measures for initiatives

Develop Analytical Hierarchy of Performance Measures

Adapt for Management priority

Identify Mission-critical vs. “Nice-to-have”

Benefits Determine $’s and $ equivalents (for non-quantifiable) Apply weight for relative importance Develop cumulative benefit index (1-100) Barriers Determine cost or cost equivalence Weight by criticality Factor by risk Develop cumulative barrier index

Benefits

Determine $’s and $ equivalents (for non-quantifiable)

Apply weight for relative importance

Develop cumulative benefit index (1-100)

Barriers

Determine cost or cost equivalence

Weight by criticality

Factor by risk

Develop cumulative barrier index

Aggregate Index Build Matrix (Benefits to Barriers by initiative) Normalize Develop relative score Synergy Incremental additive effort to perform one analysis in conjuction with another (0 to 1) Default = 1 If synergy exists, subsequent effort for secondary initiative reduced

Aggregate Index

Build Matrix (Benefits to Barriers by initiative)

Normalize

Develop relative score

Synergy

Incremental additive effort to perform one analysis in conjuction with another (0 to 1)

Default = 1

If synergy exists, subsequent effort for secondary initiative reduced

Adapt factor weightings Group by time frame Prioritize by aggregate index Schedule based on available budget Reassess on quarterly basis

Adapt factor weightings

Group by time frame

Prioritize by aggregate index

Schedule based on available budget

Reassess on quarterly basis

Methodology Quantify benefits in $’s by year Expected / High / Low Estimate implementation and operating costs in $’s by year Expected / High / Low Determine ROI Range Compare to hurdle rate Assess Risk Determine Risk / Reward Value Recommend further study or table initiative

Methodology

Quantify benefits in $’s by year

Expected / High / Low

Estimate implementation and operating costs in $’s by year

Expected / High / Low

Determine ROI Range

Compare to hurdle rate

Assess Risk

Determine Risk / Reward Value

Recommend further study or table initiative

Post-Implementation review at quarterly intervals Compare projected volume to actual Determine reasons for variance If applicable, revise forecast Update measures and weights based on confidence levels

Post-Implementation review at quarterly intervals

Compare projected volume to actual

Determine reasons for variance

If applicable, revise forecast

Update measures and weights based on confidence levels

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