Compare alternatives’ value for money (e.g. projects, investments) and allocate resources.
A picture is worth 1000 words! A 1000Minds Value of Money chart is a simple, yet powerful, way of representing the main considerations when allocating a budget or other scarce resources.
As an illustration, consider the example of allocating a budget (e.g. $8 million) across projects competing for funding. Imagine you’ve already rank the projects based on their expected benefits using 1000Minds’ decision-making and prioritization tools.
You’re likely to want to consider other factors too – e.g. depending on your application, cost, risk, confidence in cost estimates, strategic factors, etc. These other factors can be graphed against a measure of the alternatives’ benefits in a Value for Money (VfM) chart.
Value for Money chart
In the VfM chart below, the vertical axis represents each project’s benefit, expressed in terms of a ‘total score’ (normalised to the range 0-100), and the horizontal axis displays each project’s cost (in $1000s).
- With a budget of, say, $8 million, which alternatives (projects) in the chart would you select?
- Which projects represent high quality and low quality spending respectively?
- Which are good value for money?
Biggest bang for your buck!
Clearly, with respect to getting good value for money, the focus of attention is in the chart’s top-left quadrant – i.e. high Total Score (Benefit) and low Cost. (Do you agree?)
Possible tradeoffs are along the orange line in the chart’s top-left quadrant – known as the Pareto (efficiency) frontier: higher Cost can be compensated for by higher Benefit.
You may also pay attention to the size and color of the bubbles, capable of reflecting other potentially important factors, such as risk, confidence in cost estimates, strategic factors, etc.
Thus 2-4 variables of interest can be easily represented in the VfM Chart and used to help you make your selections, potentially subject to a budget constraint.
Examples of applications include:
- Allocating a budget across competing business projects (as above)
- Choosing the best public infrastructure investments
- Comparing geo-engineering responses to climate change. Case study »
- Distributing research grants
- Selecting a portfolio of venture capital opportunities
- Deciding which drugs, medical devices, procedures, etc to fund
Or build your own decision models from scratch.