Portfolio Metrics Help Clear The Fog!

Portfolio Metrics Help Clear The Fog!

Organizations and pundits often recommend a wide range of Agile portfolio metrics.  Almost all these metrics provide rich and interesting information about the portfolio and how an organization manages the portfolio. Agile Portfolio Metrics Categories describes five high-level categories so organizations can get the greatest measurement value with the least measurement effort. Each category focuses on a question. For example, if an organization wanted to understand how quickly prioritized projects reach point in the portfolio where they can deliver value, metrics from the Demand and Capacity (flow) category would be useful.  The first two categories in the model are detailed below.

Portfolio Mix metrics provide portfolio managers and the organization with an understanding of how the organization allocates work across different teams or classes of service. 

Basic Focus/Question: How has the organization allocated its resources?  Alternate versions of this question include: What is the forecasted business value by class of service? What business value is currently in the process of development?

  1. Portfolio Budget by Class of Service provides allocation information based on classic budgeting mechanisms.
  2. Portfolio Backlog Value (by Class of Service) provides a view of how work is allocated based on value.
  3. Portfolio Value WIP (by Class of Service) provides a view of the value of the work has entered the development process.
  4. Portfolio ROI or ROA (by Class of Service) provides a view of the return (pick the type) of the work in the portfolio.  Generally, this metric is categorized by status to project the flow of return.
  5. Cost of Delay by (by Class of Service) provides a view of how efficiently the portfolio is prioritized and managed. The cost of delay (CoD) is a method of placing a value on the waste inherent in delay.

Data for this category is often “harvested” from the business cases, and include return on investment (ROI), return on asset (ROA) and, in mature Agile organizations, estimated cost of delay.  The data needed to define ROI and ROA will include benefit and cost data. Use cost and benefit data investigate whether portfolio allocations are maximizing value or to meet other goals.

Demand and Capacity metrics provide feedback on the organizational capacity and the demand placed on the capacity.

Basic Focus/Question: How effectively is capacity tuned meet to demand?  Alternate versions of the question include: Where are the bottlenecks in the flow of the work?  How much of forecasted value enters the portfolio funnel compared to the amount that is delivered?

  1. Weighted Shortest Job First (WSJF) provides data on how effectively  work is prioritized  and feedback on the WSJF estimates for tuning.
  2. Velocity or Value Velocity provides a view of the rate works moves through the portfolio lifecycle. This metric type uses size (function points or story points) or value as their basis.
  3. Work in Process Violations / Expedited Requests provides a view of the how many an organization exceeds times capacity limits.  Exceeded capacity limits is a reflection of demand/capacity mismatch.

Demand and capacity metrics use data generated by the movement of work through the portfolio lifecycle. Changes in trend data of any of these metrics often provide an early sign of a mismatch between demand and capacity. 

Effective measurement is a balance.  The sample of metrics in first two categories in the Agile Portfolio Metrics framework provides part of a balanced picture.  Which metrics an organization chooses is linked to the uncertainty being faced.