Estimated Relative Impact on Resources

Problem:It is difficult to prioritize projects without some concept of the relative impact each one will have on the group doing (or commissioning) the work. For instance, if I have three projects and one is huge while two are small is it reasonable to think that the two small ones could be completed in parallel; assuming there are no dependency or resource contention issues?

Possible Solution:As an input to prioritization activities the Estimated Relative Impact on Resources (ERIR) can be a helpful tool for comparing the impact of a project against the impact of other projects.

Your mileage may vary, but I use the estimated number of person hours, money, number of people involved, and an educated guess as to the riskiness of the project to calculate a number. I call the calculated number the "Estimated Relative Impact on Resources" because it's an estimate; it's useless without comparing it to other projects (i.e., it's relative); and it's designed to show the impact on the resources of an organization. When this formula is used for multiple projects (probably applied by the same person who uses the same basis for assigning the estimates) it can provide some idea as to impact of one project on an organization's resources in relation to another project.

Here's an algorithm for calculating the ERIR: (h + (c/100)) * (((p-1) * 0.5) * p) * r

Where h is estimated number of hours, c is estimated cost, p is estimated number of people involved, and r is the estimated risk (usually on some kind of scale, e.g., 1 to 5, 5 being the highest risk). This algorithm assumes a cost of $100/hr and that people are a liability to a project. It assumes that more people assigned to a project means more communication overhead will be exhausted. Therefore, people and risk are considered related.

Examples

Project 1: A custom built password management system for an organization of about 3,000 people.
Estimated hours (all people on the project): 800
Estimated cost (besides person time): 0
Estimated number of people involved: 5
Estimated risk (scale of 1 to 5): 4
Estimated Relative Impact on Resources: 325

Project 2: A custom build white pages and personal profiles systems for an organization of about 3,000 people.
Estimated hours (all people on the project): 300
Estimated cost (besides person time): 0
Estimated number of people involved: 10
Estimated risk (scale of 1 to 5): 4
Estimated Relative Impact on Resources: 139

Some modifications you might want to include:
You may want to adjust the hourly cost to suit your environment.
You may want to calculating riskiness according to an algorithm that takes loss of business, probability, and cost to correct into account.