Project Rankings: Weighted Method

Do you know how your projects impact your company in regards to Objectives and Key Results (OKRs)?  The project’s business case is a key part of the story but how does your business case roll up to the bigger picture?  Most companies scramble to execute New Product Development (NPD) or Cost Savings projects and don’t spend the time to see if the projects in progress will make a significant impact.

If you are an executive and have a list of projects in queue, you can use a weighted method to rank your projects.  This method is straightforward but takes time to set up.  Determine the critical criteria and assign a weighted percentage to each criterion till it totals 100%.  This part takes the most time since you will most likely need to align with other executives on what the critical criterial should be.  Next, break down each criterion into five categories (I recommend less than 10) and assign a ranking (5=highest and 1=lowest).  You can also assign a “0” ranking if a project doesn’t meet the top five rankings.  The formula is Weighted Score = (Ranking) X (Criteria percentage) + (Ranking) X (Criteria percentage)…

Here is an example.

1. Critical criteria
   1. Impact to Strategic Goals: 50%
   1. Key Customers: 30%
   1. Impact to 3-year financial targets: 20%
   1. Total = 100%
2. Impact to Strategic Goals
   1. New Market: 5
   1. New technology: 4
   1. Increased market share: 3
   1. Environmental: 2
   1. Brand awareness: 1
3. Key Customers
   1. Most important: 5
   1. Next important: 4
   1. Next important: 3
   1. Next important: 2
   1. Least important: 1
4. Impact to 3-year financial targets:
   1. Largest contribution: 5
   1. Next contribution: 4
   1. Next contribution: 3
   1. Next contribution: 2
   1. Smallest contribution: 1

Use a spreadsheet to calculate the rankings for your projects.

Project #1:

1. New Market = 5 * .50 = 2.5
2. Most important customer = 5 *.30 = 1.5
3. Largest contribution = 5 * .20 = 1.0
4. Total weighted score = 5.0

Project #2:

1. Brand Awareness = 1 * .50 = .50
2. Least important customer = 1 *.30 = .30
3. Smallest contribution = 1 * .20 = .20
4. Total weighted score = 1.0

Project #1 ranks higher than Project #2 so you should start Project #1 first and assign the appropriate resources to ensure success.  The tool can be easily adjusted if you want to shift your strategy due to changing business conditions.  Using a High, Medium, and Low ranking for projects is a quick and beneficial methodology but the Weighted Method forces you to think why a project is High, Medium and Low.