It depends on whom you ask.

And that is why the common practice of assigning business values to projects using simple categories such as “Excellent,” “Good,” “Fair,” and “Poor” is misleading and usually wrong.

Why?

First, in most cases where this is used, there is no explicit quantified value assigned to each term, and team members are not calibrated or trained on how to make the assignments. Thus, each person is on-their-own to interpret how to make the assignment, and they can erroneously assume that other team members are doing it the same way.

Second, the interpretation of relative value can change as people go down a list of projects. For example, if they start to think that they have assigned too many projects as “High” they will go back and start re-assigning some of the “High’s” to “Good.” So the internal cognitive scale changes in the middle of making the assignments, and therefore, the value assignment becomes dependent on something other than an actual intrinsic value.

Third, using these types of value assignments or even “on a scale of 1 to 10” implies a straight-line relationship between the categories that is often not tested. Is a “Fair” project twice as valuable as a “Poor” project? Is a “Good” project three times as valuable as a “Poor” project?

Fourth, the categories often don’t capture meaningful differences between projects. For example, let’s say a team is using “Very High,” “High,” “Moderate,” and “Low” to assign project value. If a linear scale is assumed for projects valued between 0 and $1 million, “Low” means that a project value is between 0 and $200,000. Thus, this type of valuation essentially says that $200,000 and $0 are identical. Are they really?

Therefore, even though the results of using such methodology may appear to be valid and understandable, when you start to scratch the surface, they often aren’t.



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