Our ‘value for money’ tool can be added to your 1000minds decision model by including the ‘selection’ step.
Continuing with the earlier illustration (see decision-making and prioritization), consider the example of a government agency, a business or a not-for-profit organization allocating a budget (e.g. $8 million) across projects competing for funding.
Suppose that you’ve already used 1000minds’ decision-making and prioritization tools to arrive at a ranking of the projects, based on their expected benefits (‘criteria’).
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. They can be entered at the ‘other factors’ step (see the toolbar above).
These other factor that have numerical data (e.g. cost) can be graphed against the alternatives’ total scores (representing ‘benefits’) in a Value for Money (VfM) chart.
Value for Money chart
In the VfM chart below, the vertical axis represents the benefit of each possible project, 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 the chart’s top-left quadrant: alternatives with high Total Score (Benefit) and low Cost.
The alternatives on the orange line – known as the Pareto (efficiency) frontier – are alternatives for which there are no others that are both better and cheaper.
Other considerations too
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. When combined with the table below, it can be used to help you make your selections, potentially subject to a budget constraint.
Also, the projects can also be ranked in the table according to their Benefit-Cost Ratios (BCR) (i.e. “y/x ratio” in the table) – or any other variables of interest.