PMI-ACP Lesson 08 Nugget 2 Agile & Scrum - Value-Based Prioritization

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Value-based Prioritization–II
PMI®—Agile Certified Practitioner (PMI-ACP)®

● Describe Agile compliance and customer-valued prioritization
● Explain the three relative prioritization techniques
● List the steps used to plan projects using MMF
After completing
this lesson, you will
be able to:
Objectives

Compliance is guaranteeing that a product reaching the market will satisfy the rules that regulate the
market or stipulated by the company.
● Organizations have compliance standards ranging from branding and messaging of a product to
the features and quality of its products.
● Governments require compliance in areas involving finance, security, and standards for products
that could affect human health or safety.
● Agile projects must also demonstrate that they can satisfy these compliance requirements.
Agile Compliance

Prioritization is the act of deciding in what order the team should start working on the requirements.
● Prioritization is required as it enables the adjustment of scope to meet budget or timeline
objectives while retaining a useful set of functionality (Minimum Marketable Release).
● Requirement lists need to be prioritized for release planning, iteration planning, and insertion of
new requirements.
Prioritization

The factors to be considered while prioritizing a project are as follows:
Factors in Prioritization
Financial value
delivery by features
Cost of developing the
new features
Amount of risk removed
by developing the
features
Amount and significance
of learning, and new
knowledge gained while
developing the features

There are three prioritization schemes that can
be applied within Agile. The first technique is
MoSCoW.
● The prioritizing technique used in Dynamic
systems development method (DSDM) is
MoSCoW.
● Under this technique, requirements are
prioritized based on Must, Should, Could,
and Won’t.
Prioritizing Requirements—MoSCoW

Walmart wants to launch a new website where consumer durable orders can be placed online. Tom, the
Product Owner is faced with the challenge of prioritizing the following requirements.
If the MOSCOW prioritization technique is chosen, which of the following requirements will fall under Must
Have, Should Have, and Could Have.
MOSCOW Prioritization Technique—Real Life Example
Hardware Setup
Customer
Registration
Search Options
Onsite
Order
Placement
Capture
Shipping Details
Online Payment
Shipment
Update through
SMS
Customer Login

The graphic shows how Tom prioritizes requirements using the MOSCOW prioritization technique.
MOSCOW Prioritization Technique Example—Explanation
Must Have Requirements
Are non-negotiable and directly impact the success of the
project.
Should or Could Have Requirements
Are less important or ‘nice to have’ features. Their difference
is determined by the level of pain or loss of business value
created by not implementing a feature.
Should Have and Could Have
requirements usually have a
workaround option available.
Customer registration and login
are not a mandate as orders
can be placed without login.
Likewise Online Payment is a
desirable feature but the
customers can pay through
cheques, DD and COD, hence
workaround is available.
Hardware
Setup
Search Options
Onsite
Order
Placement
Capture
Shipping Details
These requirements are
necessary to launch and run
the website. They directly
impact customers’ usage of
the website leading to the
increase in consumer durable
orders online.
Customer Login
Online
Payment
Shipment Update
through SMS
Customer
Registration

Prioritizing Requirements—Kano Model
The second technique used for Prioritization is
the Kano Model.
● This technique was developed by Professor
Noriaki Kano. It strives to fulfil requirements
and ensure customer satisfaction.
● Under this technique, requirements are
prioritized based on Basic Needs, Performance
Needs, and Excitement Needs.
Customer
Satisfaction
Delight
Immediate
happiness
Not unhappy
Disappointed
Excitement needs or
Delighters
“Performance”
needs
“Basic” needs, or
“hygiene” factors
Poor Good
Degree of
implementation

The four categories of the Kano model are as follows:
Categories—Kano Model
These features are where customer satisfaction is correlated linearly with the quantity
of the feature.
These features must be present in the product for it to be successful.
Threshold
(Must Have)
Linear (Performance
requirements)
These features provide great satisfaction, often adding a premium price to the product.
Lack of exciter or delighter will not decrease customer satisfaction below neutral.
Exciters and
delighters
These features are least important to the customer. They will return little or no
business value.
Indifferent

A big mobile handset company is planning to launch a new version of their mobile. Jeffson, the
Product Owner has come up with a list of features which needs to be developed and included in the
mobile. If Jeff chooses to use KANO analysis for prioritizing the requirements, which of these
requirements will fall under different categories.
Kano Analysis—Example
Bluetooth
Messaging
Instant
File
Transfer
Camera
Phone
Book
Time
IR
Transfer
Call
Logs
Calling

The graphic below shows how the requirements are differentiated using the KANO analysis.
Kano Analysis—Example (contd.)
Linear Features
The customer satisfaction improves
linearly as the numbers of features
increase.
Exciters and Delighters
These features bring immense
customer satisfaction. They are time
consuming and costly to develop.
Threshold
Presence of these features does not
result in increasing customer
satisfaction.
Phone Book
Calling
Messaging
Call Logs
Time
Instant File
TransferCamera
Bluetooth
IR Transfer

Prioritization Requirements—Relative Weighting
The third technique used for Prioritization is the Relative weighting by Karl Wiegers.
● This technique is based on the premise that the features that have the highest benefits after
adjustment for costs, risks, and penalties should have the highest priority.
● A feature’s priority is directly proportional to the value it provides and inversely proportional
to its cost and the technical risk associated with its implementation.
● Each category uses a scale of 1 – 9.
● Benefits reflect the value a feature will provide, penalties reflect the negative affect a
customer will experience if the feature is not included, risks reflect the challenges of
implementing the feature and costs reflect the actual costs of implementing the feature.

Relative Weightings—Example
Features Benefit Penalty Total
Value
Value % Relative
Cost
Cost % Relative
Risk
Risk % Priority
Feature 1 8 2 10 27% 2 20% 3 17% .73
Feature 2 8 3 11 30% 4 40% 6 33% .39
Feature 3 7 4 11 30% 3 30% 7 39% .43
Feature 4 3 2 5 13% 1 10% 2 11% .62
TOTAL 26 9 37 100% 10 100% 18 100%
Priority = value %/ (cost % + risk %)
Each feature is prioritized based on its relative weighting for Benefits, Penalties, Costs, and Risk. Each
feature uses a relative scale of 1–9 to determine its rating.

The product owner should continuously assess the product backlog and prioritize its stories based on
their customer value. Determining customer value involves activities such as collaborating with
customers, creating focus groups, and reducing technical debt (which addresses quality and improving
delivery throughput). The issues involved in delivering customer value are as follows:
Agile Customer Valued Prioritization
Focus on
Innovation
Concentration on
Execution
Lean
Thinking

A minimum marketable feature (MMF) is the smallest set of functionality that provides value to the
market, whether that market is internal users (as with custom software) or external customers (as
with commercial software).
MMF can be used to plan projects that are more predictable and flexible at the same time. The steps
are as follows:
Minimum Marketable Feature
Determine the
MMF
Introduce
Slack
Manage
Change
Increase the
MMF
Accommodate
the New
Feature

Determine the MMF
The first step is to determine the MMF.
● Determining the minimum marketable product
is to define the minimum set of features that
the team is prepared to launch the product
with.
Prioritized Feature List
Feature 1
Feature 2
Feature 3
Feature 4
Feature 5
Minimal
Marketable
Product
Schedule/Budget
cut-off

Introduce Slack
The second step is to introduce slack.
● Introduce some slack or buffer, which depends
on several factors.
● The factors to be considered are how long the
project is, how many change requests are
typically raised during projects in the
organization, how reliable the organization is
at delivering products on schedule, the type of
project being undertaken, etc.
v
Feature 1
Feature 2
Feature 3
Feature 4
Feature 5
Minimal
Marketable
Product
Contingency/Nice
to have
Feature 6
Feature 7
Schedule/Budget
cut-off

Manage Change
The third step is to manage the changes.
● As soon as the project is initiated, there will be
a need to manage changes in the
requirements.
● In Agile, change management involves the
product owner making the necessary trade-
offs against the Agile triangle (value, quality,
and budget or schedule, or scope).
v
Feature 1
Feature 2
Feature 3
Feature 4
Feature 5
Minimal
Marketable
Product
Contingency/Nice
to have
Feature 6
Feature 7
Schedule/Budget
cut-off

Increase the MMF
The fourth step is to increase the MMF.
● A ‘New Feature’ needs to be included in the
existing minimal marketable product, usually
on customer requirement.
● The new feature has to be positioned
according to the customer’s prioritization. Minimal
Marketable
Product cut-off
v
Feature 1
Feature 2
Feature 3
Feature 4
Feature 5
New Feature
Prioritized
Feature 6
Feature 7
Schedule/Budget
cut-off
New Feature

Accommodate the New Feature
The fifth and the last step is to accommodate the
new feature.
● The ‘New Feature’ which is accepted will be
accommodated and becomes a part of the
minimal marketable product.
● New feature can be added by reducing the
slack or contingency. In this case, the schedule
or budget cut-off would not change.
v
Feature 1
Feature 2
New Feature
Feature 3
Feature 4 Minimal
Marketable
Product cut-off
Feature 5
Schedule/Budget
cut-offFeature 6

Quiz

QUIZ
a.
b.
c.
d.
Which of the following factors is not used in prioritization?
1
Cost of developing the new features
Amount of risk removed by developing the features
Cost of removing the new features
Financial value of the features

QUIZ
a.
b.
c.
d.
Which of the following factors is not used in prioritization?
1
Answer: d.
Explanation: Cost of removing the new features is not a factor used in prioritization.
Cost of developing the new features
Amount of risk removed by developing the features
Cost of removing the new features
Financial value of the features

QUIZ
a.
b.
c.
d.
Which prioritizing technique considers both the benefits of presence of a feature and
the negative impact of its absence?2
MoSCoW
Relative weighting
Monopoly
Kano Model

QUIZ
a.
b.
c.
d.
Which prioritizing technique considers both the benefits of presence of a feature and
the negative impact of its absence?2
Answer: c.
Explanation: Relative weighting considers both the benefits of presence of a feature and the
negative impact of its absence.
MoSCoW
Relative weighting
Monopoly
Kano Model

QUIZ
a.
b.
c.
d.
What occurs after the Minimally Marketable Features are developed in an iteration?
3
The project starts gold plating its features
The team can allocate the remaining features using MoSCoW
The product is ready for release
The project moves to a high value delivery mode

QUIZ
a.
b.
c.
d.
What occurs after the Minimally Marketable Features are developed in an iteration?
3
Answer: b.
Explanation: Gold plating occurs when more than the MMF is completed.
The project starts gold plating its features
The team can allocate the remaining features using MoSCoW
The product is ready for release
The project moves to a high value delivery mode

QUIZ
a.
b.
c.
d.
In the Kano Model which of the following categories would a new feature like a 1000
hour battery life on a cell phone fall into?4
Linear (Performance requirements)
Exciters and delighters
Indifferent
Threshold (Must Have)

QUIZ
a.
b.
c.
d.
In the Kano Model which of the following categories would a new feature like a 1000
hour battery life on a cell phone fall into?4
Answer: c.
Explanation: Most cell phone users would be excited/delighted with a phone that a 1000
hour battery life.
Linear (Performance requirements)
Exciters and delighters
Indifferent
Threshold (Must Have)

QUIZ
a.
b.
c.
d.
How does Agile deal with compliance requirements?
5
Agile projects are not a good fit for projects with compliance requirements
Agile projects manage compliance by treating the stories as epics
Compliance would be a risk that should be documented in the Risk Register
Compliance requirements must be managed as part of the overall deliverables of
the project

QUIZ
a.
b.
c.
d.
How does Agile deal with compliance requirements?
5
Answer: a.
Explanation: Agile projects must manage compliance requirements as part of the overall
deliverables.
Agile projects are not a good fit for projects with compliance requirements
Agile projects manage compliance by treating the stories as epics
Compliance would be a risk that should be documented in the Risk Register
Compliance requirements must be managed as part of the overall deliverables of
the project

● Factors to be considered for prioritization are financial value of the
features, cost of developing the new features, amount and significance of
learning and new knowledge gained while developing the features, and
amount of risk removed by developing the features.
● A minimum marketable feature is the smallest set of functionality that
provides value to both internal users and external customers.
● Agile projects must demonstrate that they satisfy the market, organization,
and government’s compliance requirements.
Summary
Here is a quick
recap of what was
covered in this
lesson:

PMI-ACP Lesson 08 Nugget 2 Agile & Scrum - Value-Based Prioritization

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PMI-ACP Lesson 08 Nugget 2 Agile & Scrum - Value-Based Prioritization