How to calculate value in value driven delivery

The methods to calculate value:

The value in monetary terms can be calculated using many terms:

  1. Simple schemes – rank the requirements from high to low.
  2. Present Value: The process of calculating the value today on future amount and can be calculated using the formula
    PV=FV/(1+i)n where PV = Present value, FV=Future Value, i=interest rate, n=number of periods.
  3. Internal rate of return (IRR): It is the discount rate at which the project revenues and project costs are equal. The project with the maximum IRR is selected.
  4. MoSCoW prioritization:
    This is based on the category prioritization where everything falls under any of the below categories:
  • Must have
  • Should have
  • Could have
  • Would like to have, but probably not possible this time

The Must haves have the highest priority, then the should have and then the rest follows.

  1. Kano model analysis:

Developed by Professor Noriaki Kano, this method classifies customer requirements into five categories:

  • Basic/threshold – The customer expects these requirements to be in the product.
  • Performance/linear- Not necessary but will increase the ease or pleasure of use of the product.
  • Excite/delight – Customer is not aware of these requirements but are happy to receive them.
  • Indifferent – The requirements which neither degrade the product or delight the customer
  • Reverse- Not required. The team can get rid of these requirements

Continuous interaction with the customer is important for the above analysis as it helps to keep us a tab on what is trending in the market currently.

  1. Monopoly money: It is a way of bidding on all the features where all the features are given priority by giving some fake money which when added up gives the first set of high set of priorities.
  2. 100-Point method: This is where the customers have to give total 100 points to all the features from the requirement list. They can distribute the 100 points across all the available requirements. The points are allocated based on what each person thinks as important, what is not.
  3. Dot voting / Multi-voting: The individuals are given a certain number of dots which will be put across the number of options provided. Individuals can put any number of dots based on the priority they assign to each option.
  4. CARVER(Criticality, Accessibility, Return, Vulnerability, Effect, and Recognisability) relative to the objective and mission of the project
  • Criticality – how important is the feature to the overall objective of the project.
  • Accessibility – Do we have everything to start the work on? Is there any dependency? Do we have to wait for any skill set? Can we start right away?
  • Return – The time taken for the payoff. Usually calculated using ROI / NPV / IRR.
  • Vulnerability – how easy or difficult to achieve the desired results? Cost perspective also needs to be looked into.
  • Effect – Is the feature helping the project to achieve the goal? What is the overall effect of the feature on the health of the project?
  • Recognisability – Can we identify with the goal? Does it look doable?
  1. Relative Prioritization / Ranking:
  • An ordered list of all features to be completed with 1 being the highest priority.
  • When new features are to be added, it has to be compared to all current features and reprioritized.
  1. Minimal Viable Product (MVP):

The minimal product (with minimum essential features) that allows can be shipped to early adopters see and rest of the features are developed post the feedback from adopters. The concept is somewhat similar to Minimally Marketable Feature (MMF) in which MVP is the first shippable product with the first set of MMF.

About Sparsh Goyal

A passionate IT professional, Sparsh Goyal boasts of 4.3+ years of experience. He has worked for various projects under AWS, Google Cloud Platform, Spring Boot, Python, Microservices, RESTful, RESTFUL APIs/SOAP, Scripting, Shell and JAVA. He is also working towards gaining proficiency in Oracle Cloud PaaS, DevOps, SaaS and Docker/Kubernetes. His primary and secondary skills validate his relentless pursuits of expanding his horizon and developing more as an IT person. He boasts of the following certifications: *Google Professional Cloud Security Engineer. *AWS Cloud Solutions Architect Associate. *Oracle certified JAVA programmer.

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