The seven components of a value calculator

So now that we know what a value calculator is and what it does, let’s look at the components that go towards making it work.

value driver modelling - value calculator components
  1. Parameters effectively the value drivers for the tool. That is, each parameter represents a box on your VDT.
  2. Baseline data populates a realistic, “current state” of the operations you are modelling. This data is effectively the value of the inputs that go inside the boxes on your VDT.
  3. The list of improvements change the value of the baseline data with the parameters. Changing these values reflects an improvement occurring within the operations.
  4. The value stream is a series of connected VDTs, each flowing into the next. These VDTs are effectively the engine that drives the calculation of the benefit.
  5. The benefits are the output of the VDTs. It could be expressed as an increase in profit, decrease in costs or increase in production.
  6. Dependency groups are groups of improvements whose outputs are somehow connected to each other. A dependency group applies a maximum, minimum, average or cumulative rule to a set of parameters. This means that the calculator can determine how a complex programme of improvements should interact with each other.
  7. The last component is the application of constraints to the benefits. As I have discussed previously, these constraints are built into the VDTs to limit an organisation’s ability to create value based on the reality of their operations.