The Value Measuring Me

An Introduction toThe Value Measuring Me
Current processes supporting government invdecisions are insufficient for effective planninof investments...

Primarily focused on financial benefits (e.g., ROI) that impact the government only

...

No structure to force the development of quantifiable measures

...

Non-financial benefits 

(results) 

factored into analysis...

Analysis is viewed as a means to get fnot a tool for on-going management & 
The Value Measuring Method

provides a scalable and flexible a

estimating and analyzing

value, risk, and co

and evaluating the relationships a
July 2001 SSA and GSA took on the task of developing an ef

assess the value of electronic services that would 

Jan 2002 VMM first articulated in Building a Methodology f

Value of e-Services

Oct 2002 Release of VMM How-To-Guide and VMM Highlig

Best Practices Committee of the CIO Council

April 2003 VMM Roll-Out, held by the Council for Excellence i

cooperation with the CIO Council’s Best Practices GSA

Feb 2004 VMM is incorporated into the Strategic and Tactica

(STAR) Program, a joint initiative of the CIO Counc

History of Value Measuring Methodology (VMM

1. Compliant with current federal regulations & OMB 2. Applicable across the federal government3. “Do-Able” 
VMM Has Been Used Successfully to Analyze Investments Across the Federal Government...

at the enterprise level...

at the project level...

SSA’s Benefit Value Score – single set of measures and weights used to evaluate the non-financial benefits of IT and Non-IT investments

Business cases have besupport the funding of spat GSA, the Department United States DepartmenDepartment of Justice, thService and the Departm
What 

Cost

Perfo

from 

L

How Much

will it Cost?

What Benefits will it Provide to...

• Direct Users• Society• Government

VMM Considers the Essential Factors of Decis
The Essential Factors are Critical to Each of V

Tasks` Identify & define 

the value structure

` Identify & define 

the risk structure

` Identify & define 

the cost structure

` Begin 

documentation

Step 1:

Develop a 

Decision 

Framework

Tasks` Identify & define 

alternatives

` Estimate value & 

cost

` Conduct risk 

analysis

` On-going 

documentation

Step 2:

Alternatives 

Analysis

Tasks` Aggregate the c

estimate

` Calculate the 

return on investment

` Calculate the 

value score

` Calculate the ris

scores

` Compare value, 

cost, and risk

Step 3:

Pull the 

Information 

Together
A Decision Framework Is Tailored to AccommRequirements of the Project or Portfolio Unde

R I S K

prioritypriority

3.0 ...2.0...

V A L U E COST 1.0 ...metric, target, scale value measure(s) Value Factors Customized Cost Element Structure Risk Inventory 

& Org

Quan

Per

Foun

On-

Ea
The Value Structure is Comprised of Five Value 

DIRECT USER (CUSTOMER) VALUEBenefits directly realized by users or multiple user groups. Users or customers will vary based on the type of initiative being assessed. Users may include, but are not limited to, government employees,other government organizations, and citizensSOCIAL (NON-DIRECT USER/PUBLIC) VALUE Benefits not related to direct users (e.g., society as a whole)GOVERNMENT OPERATIONAL / FOUNDATIONAL VALUEOrder of magnitude improvements realized in current government operations and processes and in laying the groundwork for futureinitiativesGOVERNMENT FINANCIAL VALUEFinancial benefit (e.g., cost savings, cost avoidance) realized by the government, including financial benefits received by the managing or sponsor agency as well as other federal agenciesSTRATEGIC / POLITICAL VALUEBenefits that move an organization closer to achieving its strategic goals, the priorities established by the Executive Office of thePresident, and congressional mandates
Value Measures Define the Full Range of Desiof the Value Factors...

> 10 m

11–14 

Length of service disruptions 10 minutes

Target 

Latency 75 milliseconds

No = 0 0 disru1 disru4 disru

Is an executable Continuity of Operations Yesplan in place (with a backup NOC) sufficient to pass annual certification?Frequency of service disruptions None

Service with:• Minimal or no disruptions• Consistent service regardless of n

demand

• High fault tolerance with built-in re• Adequate speed to meet business 

Brief Description

Performance Metrics

Concise, Illustrative Name Robust Reliable Service

> 10 m

11–14 

Length of service disruptions 10 minutes

Target 

Latency 75 milliseconds

No = 0 0 disru1 disru4 disru

Is an executable Continuity of Operations Yesplan in place (with a backup NOC) sufficient to pass annual certification?Frequency of service disruptions None

Service with:• Minimal or no disruptions• Consistent service regardless of n

demand

• High fault tolerance with built-in re• Adequate speed to meet business 

Brief Description

Performance Metrics

1 Concise, Illustrative Name Robust Reliable Service2

4

3

VMM articulates a structured approach to measuremea definition that consists of four parts:
Each Value Factor and Measure Is Prioritized tReflect Stakeholder and Organizational Priorit

VALUE FACTOR / VALUE MEASURE

To

Visibility into Government ProcessesSecurity of Government Systems & Safeguarding of InformationAccountability and Stewardship of Tax Dollar & Government Assets

SOCIAL VALUE Total Cost Avoidance to InvestmentTotal Cost Savings to InvestmentGOVERNMENT FINANCIAL VALUE Improved Government ImageQuality of Services to Customers & CitizensPerformance on Agency Mission, Strategic Goals & Government-wide GoalsCompliance with Laws & RegulationsManagement Controls & PlanningAccountability & Financial Mgmt. Reduction in Payment DelinquencyQuality, Consistency & Range of Travel ServicesUser Access to Information & Knowledge Sharing CapabilitiesSTRATEGIC/POLITICAL VALUEEmployee ProductivityData Accuracy & ReliabilityGOVERNMENT OPERATIONAL / FOUNDATIONALUser-Related Process Efficiencies, Streamlining & Reduction in Administrative BurdenUser Friendliness for Managers & TravelersDIRECT USER VALUE 

The prioritization process is facilitated by Expert Choice, an 
Risk and Cost Structures are Also Tailored to Investment or Portfolio...

Risk Structure

Cost Structure

O

/ F

Strategic / 

Political

Direct 

User

Probability

Risk Factor 2...Risk Factor 3....

Impact Impact 

Risk Factor 1...RISKS:

Risk will cause expected value to decreas

increase. The overall affect of ris

• The probability (likelihood) that it will • The severity of its impact if it does oc

1.5 Other1.4 Studies1.3 Development Support1.2 Software1.1 Hardware

1.0 System Planning & 

Development

2.1 Procurement2.2 Personnel

2.2.1 Government2.2.2 Contractor

2.0 System Acquisition & 

Implementation

3.3.3.3.3.

3.0 
Alternatives Must 

Address People, 

Process & Technology!

training

outreach

management

staffing

communications

recruitment

socialization

user support

508 requirements

language requirements

EA / FEA

hardware

software

interface

data req.

EA / FEA

The Decision Framework is Used to Guide the Analysis of Viable Alternatives...
The Output of the Analysis Can Be Used to ChAlternatives or Investments...

Comparing Cost To Value

(Expected & Risk-Adjusted)

0

102030405060708090

100

$- $5 $10 $15 $20 $25 $30 $

C O S T ($M)

V A L U E 

Alt 1

Alt 2 Alt 3
The Granularity of the Analysis Provides Decisthe Opportunity to Focus on Specific Areas of 

0

50

100

Risk Adjusted 

Expected Value 

Alt. 1 Alt. 2 Alt. 3

Comparison of 

Direct User Value Performance 

0

20406080

100

Alt. 1 Alt. 2 

Risk AsseStrategic 

Which alter

greatest risk 

Poli

Which alternative will provide the 

greatest value from the perspective

of Direct Users?