Aldi's Nuts

Count the nuts!

Quantitative prioritization focuses on counting “things” such as money, new customers, or market share. This form of prioritization has one basic requirement, whoever is prioritizing work needs to agree on at least one tangible attribute that can be identified and counted.  A classic simple approach to quantitative prioritization uses Return of Investment (ROI).  ROI is defined as:

ROI = (Average Net Benefits) ÷ (Initial Costs)

Average Net Benefits is the residual value from the results piece of work (the time value of money is used) after adding total benefits for a specific period and subtracting all expenses for the project for that period.

Initial Costs include any expenses related to the initial development of the project.

The basic flow of work for prioritization mirrors simple qualitative forced ranking.

  1. Gather a list of work items to consider.
  2. Calculate the ROI (or another quantitative factor) for each item.
  3. Sort the list by ROI.
  4. Horse trade to generate consensus on order.  Horse trading typically is driven by qualitative factors that are not accounted for 

The hard part or magic in the process in the calculation step. The calculation of ROI (or any other quantitative item such as market share) requires estimation of cash flows and an understanding of the time value of money (net present value). Not hard, but some understanding of finance is a necessity.  

Most quantitative approaches are most useful at a portfolio level where programs, products, or features are being evaluated.  At this level, the aggregation of work will be more apt to estimable or measurable than at a story level. 

Next: Revisiting Weighted Shortest Job First