The Prioritize Process utilizes the Program Budgeting and Marginal Analysis’s (PBMA) framework which is designed to guide resource allocation decisions in a manner that is explicit, rigorous and transparent. The framework incorporates multi-criteria decision making and includes marginal analysis, which measures incremental changes.
The incremental changes come from the staff managing and delivering the services within your organization. These ideas are generated by asking the question, what action would you take if your budget was increased (investment changes) or decreased (disinvestment changes) by a given percentage or amount?
Once your staff develop their ideas into proposals, the potential impact of each proposal to meet your organization’s objectives is assessed. The impact of any possible disinvestment or investment is measured against a set of criteria developed specifically for your organization.These weighted criteria link directly to your strategic priorities and objectives.
The same assessment is done across all areas of your organization. Assessments of possible changes in any one area are therefore comparable to assessments in other areas, that is, proposals from across the organization can be ranked in two lists: one for investments and one for disinvestments.
ABILITY TO COMPARE
Thinking about these incremental changes also applies to the comparison of ranked investment and disinvestment proposals. With marginal analysis, a decision maker assesses the benefit lost associated with a disinvestment, to the benefit gained with an investment.
Such comparisons lead to recommendations on re-allocation of funding. This means that the highest benefit gain is an estimate of opportunity cost, or an estimate of what is given up by allocating resources. In addition to the fundamental economic principles of opportunity cost and the margin, the best implementations of PBMA also incorporate key ethical conditions to ensure that the process is administered in a fair and transparent manner.