How to calculate value in value-driven delivery
These are the methods used to calculate value
Many terms can be used to calculate the value of a monetary term:
Simple schemes – rank the needs from high to lowest.
Present Value: This is the process of calculating the value of today on future amounts. It can be calculated using this formula PV=FV/(1+i), where PV = Present Value, FV=Future Valu, i=interest rate and n=number period.
Internal rate of return (IRR), is the discount rate at the rate at which project revenues and project expenses are equal. The maximum IRR project is chosen.
Prioritization of MoSCoW: This is based upon the category prioritization in which everything falls under one of the following categories:
You must have
Would love to have, but it is unlikely at this time
The Must-haves are the most important, followed by the Should have and the rest.
Kano model analysis:
This method, which was developed by Professor Noriaki Ko, categorizes customer requirements into five categories.
Basic/threshold – The customer expects these requirements in the product.
Performance/linear – This is not necessary, but will improve the ease of use.
Excite/delight – The customer is unaware of these requirements, but they are happy to receive them.
Indifferent – Customer requirements that neither degrade the product nor delight it
Reverse-Not required These requirements can be removed by the team
For the above analysis, it is important to maintain contact with customers in order to keep track of what is currently trending in the market.
Monopoly money: This is a way to bid on all features, where all features are given priority by donating fake money. This adds up to the first high set of priorities.
100-Point Method: Customers must give 100 points to all features on the requirement list. They can divide the 100 points among all requirements. The points are assigned based on what each person considers important and what is not.
Dot voting/Multi-voting: Each individual is given a set number of dots that will be used to represent the various options. Based on the priority they give to each option, individuals can place any number of dots.
CARVER (Criticality. Accessibility. Return. Vulnerability. Effect. and Recognisability) is a measure of the objective and mission for the project.
Criticality – How important is the feature in relation to the overall project objective.
Accessibility – Do you have everything we need to get started? Is there a dependency? Is it necessary to wait for a skill set? Can we start right away?
Return – The time it takes to pay off. Usually calculated using ROI/NPV/IRR.
Vulnerability – How easy or difficult is it to achieve the desired results. It is also important to consider the cost perspective.
Effect – Does the feature help the project achieve its goal? What is the overall impact of the feature on the project’s health?
Recognizability – Can you identify with the goal? Is it possible?
Relative Prioritization / Ranking:
A numbered list of all features that must be completed, with 1 being the highest priority.
New features must be compared with all existing features and reprioritized.
Minimal Viable Product (MVP).
The minimum product (with minimal essential features) can be shipped to early adopters. After that, the rest of the features will be developed based on feedback from the adopters. This concept is similar to Minimally Marketable Feature, in which MVP is the first product that can be shipped with the first set MMF.