Portfolio Prioritization: LPM in SAFe® becomes straight-forward

• Portfolio prioritization aims to allocate available resources to individual projects in such a way that the portfolio achieves the greatest possible value creation. This means giving priority to those projects that would suffer the greatest loss of value if they were delayed.

• The loss of value due to project delays is also called Cost of Delay. The CoD must be related to resource consumption to provide a relevant optimization criterion. This metric is also called Weighted Shortest Job First:

  $$WSJF = {CoD \over Resources}$$

• SAFe® recommends calculating the CoD based on proxy variables for “value”, weighted by a Fibonacci sequence.

• With modern Real Options the CoD can be calculated in a truly financial way. This ensures a fast, intelligible, and rational calculation of CoD and WSJF. No need for proxy variables anymore.

• Noteworthy, the resulting WSJF aligns financial, strategic and operational priorities.