PriorityONE is essentially a structured process of identifying and ranking which options from a list of options are the most optimal. Selection involves knowing and/or assigning certain characteristics for all the options, often to do with say for example capital expenditure, and these would include addressing the following :
- Degree of difficulty or ease of implementation
- The level of payback or return on investment
- Those options that must be undertaken and done
- A known available CAPEX Budget (e.g. below)
It should be pointed out that PriorityONE can be used for various selection exercises, be it selecting and/or nominating individuals, awarding bonuses to staff by name as decided by management, feedback on marketing options, strategic decisions or CAPEX as already indicated above and shown in more detail in the explained example below. Whatever the overall nature or qualities of the items to be evaluated it is important to discuss and decide beforehand what the characteristics or qualities to be considered are, even if these are subjective. All the individuals tasked with the evaluation of the options need to have a scoresheet against which they are all able to evaluate what in their opinions the assigned score should be for the options in question.
Each option needs to be evaluated on its own merits against the pre-set criteria, which suggests that the persons involved in the evaluation process ought to have some additional pertinent knowledge, information and experience. This is in order to ensure that the quality of the outcomes have a certain minimum reliability and confidence level in terms of accepting the outcome. It needs to be borne in mind that this is not a precise scientific review though there is a certain degree of logic with essential measurements which make the outcomes useful.
The colour coded matrix table below illustrates vividly how certain combinations of degrees of difficulty to ease with levels of payback / benefits result in different combined scores. The bright green weightings indicate a factor of 75% or more, dull green between 45% and 75%, yellow between 20% and 45% and orange between 1% and 20%. Obviously options within the green band should receive priority while the orange options are better avoided or delayed - though it is possible that within the orange group there are certain options that must be done regardless. Only about 1% are red and most likely to be discarded.
This is not a complicated process. There always seems to be a "wish" list of items to choose from and there are always a range of differing factors attached to the items which tend to make choosing between options more difficult. More often than not there is a designated group or sub-committee tasked with selecting from a list. There should be some uniformity or similarity between all the items in a list. So including marketing strategy options or names of individuals to be part of a team of people are both mutually exclusive from each other as well as capital expenditure which is being used in the example below.
Step 1 : Simply list all items and allocate a number, for reference purposes, and with brief descriptions or give describing titles. There is no need to place them in any special order or sequence. Example below is for significant expenditure items, mainly Capex, and other less common significant expenditure items.
Step 2 : Each person in the selection group, on their own, will go through the list in a thorough manner comparing each option with the other on an one to one basis, using a preset out form for easy recording. The co-ordinator will enter all these inputs into a spreadsheet so that all the options are ranked simply by the number of "votes" each option received. This is a simple first pass and done without any other inputs like degree of difficulty to implement or the payback/return or if a "must be done" item. The items may be listed without monetary values as these often skew the selection.
The total outcome of aggregating each persons' option selection, per the option selection form illustrated above, is shown in a bar chart below. This clearly shows the first pass preferences.
Step 3 : What is the degree of difficulty to implement the option using a scale from 5 to 40, with the lowest number 5 representing the greatest difficulty and the higher number 40 representing the easiest implementation. Clearly persons with some insight need to decide on what is the most appropriate factor and clearly some subjective judgement comes into play. From practical experience letting each person decide themselves results in a more even spread and representative weighting.
Step 4 : What is the degree of return or payback per option using a scale from 5 to 40, with the highest number 40 representing greatest return and the lowest number 5 representing the least. Again, persons with some insight - the financial accountant - need to decide on what an appropriate factor per option should be. This tends to be more objective though does not have to be precise.
Step 5 : The first review is to decide if there are any options, no matter what their weighting is, that must be included and implemented. Then another real constraint is if the financial budget available is not sufficient to enable all the remaining items to be included - which is invariably the case. This would just require to determine what the aggregate cut off is and eliminate those lower down the list.These have by definition been defined as being of less value bearing in mind that there may be some "must do" options that need to be added to the top of the list.
The above diagram illustrates the outcome based purely on the responses to the questions per the example simply to illustrate the results of this process. I would in a real situation expect New Plant to be near the top, if not at the top, of the options selection list.
The diagram below illustrates the differences between the weighted more erudite process result with the first pass selection that was done on a simpler more superficial basis. This highlights the positive benefits of a more rigorous multi- dimensional interrogative approach.
And then lastly there is a graphic representation of the outcome. It is said that a picture is as good as a thousand words and this is clearly displayed below.
If you have any type of list that requires a unique and optimal selection to identify the most appropriate option or ranking of options, and you would like assistance with this process, then please contact me should you want to discuss further.