Fmi_17_3.qxp

Priority Ranking for Investments
in Assets: A Tool for Times of
Scrutiny
The Challenge
settings of individual government programs.
On the premise that needs usually signif- The tools enable program and departmental icantly exceed available resources, govern- Hendrik Siré
ments face difficult challenges in allocating investment opportunities against a suite of Hendrik Siré, MA, MBA, CMA, CMC, is a Partner resources they have to the wide variety of common public policy and performance cri- with Goss Gilroy Inc., Management Consultants. Mr.
Siré provides consulting services to federal govern- public needs. Governments appreciate tools teria, and to come up with a credible meas- ment departments and agencies in the areas of asset that support timely and informed allocation ure of level of priority from highest to lowest strategies, frameworks, policies and governance, long-term asset and investment planning, business case decision-making and that offer the possibil- preparation and time value of money analysis. Prior to ity of a fair and open rationale for the deci- joining Goss Gilroy, he held positions in the form of a project score, which can range Sypher:Mueller International, Ports Canada and theCanadian International Development Agency.
from zero to 500. With a well-designed tool, increases about the risks, impacts and effects only a handful of the highest priority proj- of allocation decisions. Certainly audits, ects would score above 420. Organizations evaluations, risk assessments and perform- ance measurement processes are contribut- final score close to unassailable — the ing to the increased scrutiny of allocation robust averaging of credible, informed opin- ion within the organization, adjusted forcommon biases. The cumulative outcome of The Utility of Priority Ranking
an annual exercise is the ranking of pro- posed investments from highest to lowest, challenges in allocating resources for asset with an identified funding threshold, below which funding is not available. Investments safety, for compliance with laws and poli- falling below the line are either deferred to cies, for refresh, evergreening and renova- future years or rejected, to be reworked prior Thomas Robinson
tion of existing asset bases, for managing a to being submitted again for consideration.
Thomas Robinson, BA, CMA is a retired public ser-vant. Over his 37 career with the Federal Government Mr. Robinson worked for National Defence, Trans- Background
port Canada and Fisheries and Oceans. Mr. Robinsonalso instructed part time for the Profession/Business change all compete with each other, across Accounting program at Algonquin College between some time, in international organizations 1987 and 1997. Mr. Robinson works occasionally on IM/IT, fleet, equipment, and real property.
a part time assignment basis in the capital planningarea.
form of multi-year flows compete with larg- Canada. However, it can be said that CPPR competing priorities and in maximizing the er disbursements in the form of standalone for assets got its start at the federal level pressed to find decision-rules for the alloca- next applied in the Department of Fisheries tion of resources that are defensible at the Services (in which Mr. Siré also participat- DM’s table, that meets the Treasury Board ed), developed a project scoring matrix for expectations for rigorous stewardship and office accommodation projects that was both that leave auditors and evaluators satisfied.
matrix by applying it systematically across a mous depth of crucial information about the to Capital Project Priority Ranking (CPPR) subject investment and its relative impor- or Priority Ranking for Investments in Assets tance. This CPPR matrix served it purpose craft harbours. Only scientific equipment (PRIA) as useful tools to meet a variety of effectively to stakeholders in other govern- tools, fully customizable to the distinctive the rigour being applied to selecting among PRIORITY RANKING FOR INVESTMENTS IN ASSETS agement Board (IMB) ensures the integrity important to leave space for the proponent of investment planning, project scoring and to explain in his/her own language the rat- the capital project peer review process.
stakes in the process – or any benefits; ing that they have selected. The informa- Close to eight years later, DFO continues • The projects and flows have “genetic” tion provided in justifying project ratings helps the reader to better grasp key aspects tions, and the IMB and peer review contin- features that allow for differential scor- ue to play their roles. The Department sees two large pitfalls of priority ranking. The first pitfall occurs through breathless and base, and for communicating critical infor- overhasty implementation, resulting in use mation about the quality of projects to sen- without effective testing and in use without tomized the CPPR matrix in order to allo- cate $6.0 million in incremental funding to another; the strategic objectives are there- The second pitfall relates to over reliance.
fore known and achieving strategic align- Once the tool is in place, there is the chal- 2003. The Directors General of each of the lenge of managing expectations around pri- • The projects and flows represent magni- ority ranking. Priority ranking is an aide to tudes of investment that have “strategic decision-making, not a substitute for it, as content” for the organization; in other Dr. Watson wrote over ten years ago. In the projects would receive the limited incre- demonstrated that the involvement of sen- of technology, financial viability, client challenging and changing of project scores.
At the end of the day, priority ranking will process of information gathering and proj- only be as good as the effort made to put it ect scoring can yield an authoritative result.
perceived to be a high probability that all applied annually. The need for stewardship using CPPR for all asset categories, includ- ing the vehicle fleet and scientific equip- well when it is implemented in a deliberate Conclusions and Next Steps
and thoughtful manner. There is a need to: • Customize and define the criteria carefully; integrating tool in the investment planning (1) by a rigorous annual process for project • Establish practical, operationally efficient descriptors for each rating level, 1 to 5, departments. It has proven its worth in sup- porting qualitative deliberations about rela- • Apply weightings to the individual crite- project. Needless to say, there is a degree of through rigorous departmental process. Pri- correlation between the risk score a project “Pilot test” the matrix against “live” ority ranking is an indication of the care projects and to learn from these trials to adverse consequences of a project not pro- understand the results of projects. In the right context, project scores provide addi- annual process, a process that corrects for tional useful information, and shed light on key factors for making meaningful resource When CPPR/PRIA Works Well:
over. In the future, analysts will seek to bet- investment projects and flows have several priority matrix is owned collectively, and ter integrate risk management and priority its legitimacy is measured by its accept- • There is at least some degree of rationing ratings and scores. Analysts will also seek to better use IMIT solutions in linking data departmental salary, O & M and invest- rate a key feature that can be too easily neg- and information and in accelerating process lected: the explanation of rating. In filling and improving the quality of priority rank-

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