How to create a scoring model for your projects or ideas

You and your team may come up with many ideas for projects in your company. Obviously you cannot do them all. You won’t have the time, money or resources to do that. Here is a quick and effective way to create a scoring model for your ideas to help you select those that are most important.

Please look at the table below. You will have to fill one of these for each and every idea. The final score for the idea is the one in the bottom right corner.

Criteria
Group
Criteria
Group
Importance
Criteria
Criteria
Importance
Rating
Rating
Value
Criteria
Score
Average Per
Criteria Group
Total Score
Financial
10
Estimated Cost
5
Better
2
10
Return on investment
5
Good
1
5
Total for Group
10
15
1.50
15.00
Marketing
10
Appeals to current market
12
Best
3
36
Can use existing marketing methods
4
Better
2
8
Total for Group
16
44
2.75
27.50
Technical
5
Ease of implementation
10
Best
3
30
Possible without external consultants
5
Better
2
10
Total for Group
15
40
2.67
13.33
All Groups
55.83

Now let me go through every aspect of this table to explain the concept. First you will need to decide on criteria groups. I have 3 examples in the table: Financial, Marketing and Technical. You will very likely have more. Maybe one for Reputation, Employee Morale, Community Involvement, Profitability or any other which you find are important things to examine. You will very likely adjust these over time as your priorities change and also as you refine and improve on your model.

Every criteria group has an importance weight. Just pick any one of the groups and give it any number. 10 is usually a good number to give but really you can give any number to your first group and you will know why I say that. Once you have given your first group a level of importance by assigning it a value such as 10, it becomes easier to determine what importance value you will give to the other criteria groups because that number will be relative to the first.

So in the example in the table above, we think Marketing is just as important as Financial criteria so we give it a 10 as well. We give Technical a 5 because we think it is only half as important as Financial criteria. Maybe we are a company that uses only basic technology or we already have all the technology we need. However our Finances really need some special attention this year and therefore they are twice as important as technology.

Now if that is not the case and you thought that Technology was so critical that it is twice as important as Finance then you would give it a 20. Of course if you cannot compare Technology with Finance then compare it with Marketing and ask the same question to arrive at your importance weight. So ask yourself whether Technology is half or twice as important as Marketing and determine the score.

Next we have the criteria within each criteria group. I have a few examples here in the table for you to examine. Again within each group you can start with one criteria, give it an importance weighting and then weight the other criteria in comparison to it just like you did for the group criteria importance. In this example I started with a 5 to illustrate that it does not matter what value you start with it as long as you rate the others in relation. It also does not matter what the total possible values for a group are. The averages and the math calculations will take care of that by “normalizing” everything. Normalizing is the process of bringing everything together on a common scale. If we try to do that at first we will struggle. Better to be free to add weightings and then normalize by averaging at the end.

The Rating column is what rating, whether Good, Better or Best, you will give to an idea for that specific criteria. Don’t forget that you have to fill in the entire table for each idea. Each criteria has at least three levels of Good, Better and Best. So for instance for Estimated Cost maybe your Good is any idea that will cost between $200,000 and $300,000, Better is anything between $100,000 and $200,000 and Best is anything below $100,000. The number you specify for these bands really depends on your company size and the total company budget you have set aside for projects.

So with that in mind you score the idea on what the estimated cost is giving it a Good, Better or Best rating.  You do the same with the other criteria.

One thing you have to be careful of is that all your criteria have the same “direction” for ratings. This is the main reason why I don’t use ratings like High, Medium and Low. In our example here I used Good to be any idea that costs between $200,000 and $300,000, Better for those that cost between $100,000 and $200,000 and Best for any that cost less than $100,000. This implies that any project that costs over $300,000 would not even qualify. That is because I consider projects that are more expensive to be less appealing. Now if I had used High, Medium, Low then there could be some confusion. Does “High” mean “High Cost” or does it mean “Highly Favourable”? If I really meant Highly Favourable but people who were applying the scores thought it meant High Cost then that would reverse the values in the calculation and more expensive projects would get higher scores and make them look like they were more appealing.

Sometimes to make that clear in the scoring you might have to reword your criteria. So if Estimated Cost might become confusing and make people rate them incorrectly then you can reword the criteria to something like “Affordability” for instance. Whatever you do just make sure that people who are entering the ratings have a fully documented explanation of what the ratings mean so that there is no confusion.

The Rating Value is the number associated with the rating: 1 for Good, 2 for Better and 3 for Best. You can give any values. These are just the simplest to use. Again the math will take care of it all when it is normalized and you have a final score.

The Criteria Score column is the product of the Rating Value given for a specific criteria multiplied by the importance of that criteria. Here is where it becomes clear what the importance weighting is doing for you: the more important the higher the score. The total for the criteria group is how much an idea has scored in total for the Finance criteria group or the Marketing group etc. This is an important intermediate calculation that we will use for the next step

The next column Average Per Criteria Group is a division of the Criteria Score by the Criteria Importance. This normalizes the values for all criteria groups. This puts the “Total Score for Group” on the same scale so that you can see that an idea scored better or worse in one criteria group compared to the other. It’s also nice to know that an idea really scored well in the Technical group for instance before applying the importance weighting of the Technical group. It can be also used to compare how different ideas fared within the same criteria group. So for instance when we have scores for Idea1 and Idea2 we can use these numbers to say that Idea1 did better than idea2 in the Technical group but worse in the Financial group. This might encourage further discussion and analysis.

The next column is the Total Score column. It applies the weightings for each criteria group. So as we said earlier if Financial criteria are, for example, more important than Technical criteria then this column will reflect that importance weighting. It is a multiplication of the Average Per Criteria Group to the Criteria Group Importance figures.

The final figure in the bottom right hand corner is the final score for the idea. It is the total of all the individual weighted group criteria scores.

If you are comfortable with the math you can play around with variations to this model. I presented this one in order to cover a number of concepts that you might want to consider.

Hope you found this useful. Let me know what you think. Leave me a comment.

Muneer

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