In the simple factor scoring model different projects are evaluated based on criteria deemed important by the company. For example, suppose the company is trying to rank 6 different projects. The company has identified the following criteria are important in project evaluation: NPV, market share potential, environmental friendliness, operating necessity, and technological superiority. The company uses a score of 1-5 with five being highest. The company might invite knowledgeable people within the organization to score the projects on the criteria and the projects are ranked according to the overall highest score.
The results of such an analysis might be captured by the table shown here. For example, Project A receives a score of 4 on NPV, 2 on Market share, 3 on Environmental, 4 on operating necessity, and 4 on technological superiority for a total score of 17.
|Project||NPV||Market Share||Environmental Friendliness||Operating Necessity||Technological Superiority||Total Score|
Based on the above analysis the projects will be ranked in order C, A, D, F, E, B