Decision Lens grades its plans because intuitively we know that making choices yields consequences. Our grading system is a way of measuring those “consequences” that is quickly and easily understood. While a project is an item being considered for a plan, a plan itself is made up of a choice of projects to do and perhaps additional information about how to schedule them.
How does grading work in school?
In any class, students are graded based what they know and have learned, but how are they actually graded? Understanding this helps us to understand Decision Lens’s grading. Teachers grade students by comparing the student’s knowledge to educational benchmarks, for example, did the student demonstrate mastery of paragraph structure in an English class? Our grading works exactly the same way, we compare the plan’s performance to benchmarks or targets. Sometimes the targets are set directly by the user, for example budgets. Other times those targets are found through a deep analysis of user data that considers the universe of possibilities available. Either way, the end result is a target that can be used for grading purposes.
Targets in Decision Lens
In Decision Lens we currently ask for only one target; your budget. This “spending target” helps drive our deep analysis of your data; however, it also drives our “Cost Grading” of your plans. How close you are to your spending target determines your grade. For Value, Risk, and Balance grading, we also have targets, but those targets are automatically determined by analysis of your data.
In order to have the most fidelity both above and below your budget, the grade for hitting your spending target, aka your budget, is a C. While a C grade is not considered very strong, it does represent achieving your target, leaving room to perform above (As and Bs) and below (Ds and Fs) your target. In fact, for all of our grading, the target value receives a C precisely for this reason, so we can understand being under target as well as being over target.
- We set the target grade to a C so that we can understand being below target as well as being above target. Giving the target a grade of C allows us to understand our progress towards, and perhaps over, our target.
How Grading Works Conceptually
When planning, people collect useful information about the projects they are considering.
Project data examples:
- How much does this project cost?
- How long will the project take to complete?
- What kind of benefits (e.g. Revenue) will this project likely give?
- How confident am I that the project will go as planned?
We need to use these project measurements to tell us information about plans, so that we can understand the strategic consequences of that plan, (a plan is just a collection of projects that you plan to do). For instance, if we have a simple cost column for all our projects, we could sum the cost of the projects in our plan to get a cost for the plan. We have turned project level information into plan level information by summing.
- Conceptually, our grading uses project level information to create plan information, by comparing plan performance to targets.
How Decision Lens Grading Works
In Decision Lens, every measurement we grade on is classified as either Value, Cost, Risk, or Balance (our overall score is simply the grade point average of those grades). Each type has different grading methods. Before we delve into them, let’s recall what each type means:
- Cost: is something you are constrained by. For instance, your travel budget, number of engineers available, or workshops available.
- Value: is something you want to do better on. For instance, customer happiness, revenue, military readiness, etc.
- Balance: is something you care about the diversity of. For instance, if you have regions for each project, you may want to make sure you are equitably funding projects across each region, and are not short-changing anyone.
- Risk: measures how certain you are the project will perform as indicated. For instance, a simple 1-5 rating of how sure you are the project will succeed.
Before presenting the grading methods from easiest to most difficult, we should look at the numeric scale of grading we use.
Numeric scale for grading
Although we report grades as A-F, there is a numeric scale that Decision Lens uses for computations. We need to use this scale for some of our explanations about grading, so let’s discuss it now. The idea comes from percentiles. Below the 20th percentile of a group is horrible, that is an F. Above the 80th percentile is very good, i.e., an A. The 50th percentile is the middle, i.e., a C, and also our target. Doing better than your target gets closer to an A and worse than your target gets closer to an F. The scale is:
- A: 80-100 score
- B: 60-79 score
- C: 40-59 score, where 50 is the target
- D: 20-39 score
- F: 0-19 score
Grading your plan
As mentioned earlier, we grade by comparing your plan’s scores to various targets. How close you are to achieving your target determines where on the 0-100 scale your numeric grade is.
The steps for grading are:
- Calculate your plan’s score on that measure (for instance, for cost, calculate the total spending).
- Compare that value to the target (for the cost example, we compare to the budget).
- Score on the 0-100 scale, 0 meaning you completely failed to hit the target, and 100 means you went as far as possible better than the target.
The only difference between Cost, Value, Balance, and Risk grading is the targets and how we measure your success towards those targets. Let’s look briefly at each case:
- Cost: we simply compare the spending of the plan versus the target budget. Spending exactly your budget gets a 50, a C, spending below budget moves you towards the A, and spending above budget moves you towards the F range.
- Value: we set the target for you by searching all reasonable plans with your budget and looking at the spread of values on the given measurement. We then compare your plan’s measurement to that target. C means you achieved the target, lower means you missed the target and above the C means you exceeded the target.
- Balance: we compare the spending of your plan, by category, to targets we set automatically for you. The targets are set by looking at the spending by category of all your projects (backlog and all).
- Risk: in this case, we calculate the average risk per dollar spent of your plan and compare that to predefined targets. The C target is a medium risk level per dollar spent. If the average risk per dollar spent is worse, your grade moves towards an F, and if it is better, you move towards an A.
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