Value Proposition

Value Proposition - Value Propositions are short documents that describe the costs and benefits of implementing an idea.

A Value Proposition is part of a portfolio management process of identifying and prioritizing work.

The Value Proposition provides some preliminary information about a proposed body of work.

Although the Value Proposition is created at a high-level, it contains enough information so that your organization can determine if it is worth pursuing or if the work should be dropped.

If the work is worth pursuing, a more detailed Business Case can be created next.

A Value Proposition contains the following information:

Name of the work. This is a one-line name, and the names can be standardized for similar types of work if you choose.

Description of the work. A brief description of the work. Keep this to one paragraph maximum, but also make sure that it provides enough information so that others can understand the work that is being proposed.

You may have standard descriptions for operations and support, discretionary, management and leadership and overhead.

Work category. Specify whether this work is operations and support, project, discretionary, management and leadership, overhead or non-labor.

Balancing categories. The balancing categories were defined early in the Definition process. For each balancing category that you defined, specify how this work is categorized.

For instance, if you have a balancing category for “Risk,” identify whether this work is high, medium or low. If you have a balancing category for “Internal / External,” identify whether this work is internal or external.

Estimated business benefit. Describe the business benefit at a high level. If you have any hard numbers, include them here.

Otherwise, describe the business benefit in terms of continuing operations, process improvement, new products or markets, increased revenue, cost reduction, increased customer satisfaction, etc. If the work involves infrastructure or increased internal capability, the business benefit may be indirect.

Estimated effort and cost. The estimating is done in two parts - high-level and more precise. The requirement now is for a high-level estimate.

However, if you have more detailed, hard numbers, disclose them now, since this will save you some time in the Prioritization step. For instance, you may have a sense for the cost of operations and support work based on the current and prior year’s costs.

Project work may be more difficult to estimate, but there are some techniques to utilize in creating an initial high-level estimate. Your estimate should provide a sense for both the labor and non-labor costs.

The labor costs will be reflected in your estimate of effort hours. When you are putting together the Value Propositions, you should expect a cost estimate to be within plus or minus 100%. In other words, if the work ultimately costs $100,000 to complete, your estimate at this point might be anywhere from $50,000 to $200,000.

This gives you an order of magnitude estimate and tells management that the effort won't be $10,000 and it will not be $500,000. You may need to determine an estimate for labor hours, but that will ultimately be converted to a cost for the Value Proposition.

Likewise, you don't have to estimate duration at this time. Much of the duration estimate is based on knowing how many resources are being applied, and you don't have the ability to make that decision yet.

Change from current year. If this work exists in the current year, provide the current cost (or projected cost) and the reason for any change.

This will be applicable for work categories such as operations and support, discretionary and management and leadership. If the proposed cost and effort for next year is different than the current year, justify the reason for the change.

If the costs are the same, just state so. If the work did not exist last year (for instance a project), state that as well.

Alignment. Validate the alignment by specifying how this work contributes and aligns to your organization goals, objectives and strategy.

Is the work required? Specify whether you feel this work is required. For instance, work may be required for legal or regulatory reasons, even if it is not aligned and does not have business benefit.

Urgency / consequences of not performing this year. Describe the consequences of not performing the work. In many cases, this is just as important to know as the business benefit and alignment.

Some work is very valuable to the organization, but it is not urgent. Based on priorities and available funding, some very beneficial and aligned work may need to be postponed until a future year.

It might make sense to also comment about the consequences of not receiving the full funding authorization for this year.

Vision


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