When organizations bring initiatives to a portfolio planning event, one of the most common (and costly) mistakes is presenting cost and ROI estimates as single point values. A project "costs $500K and returns $1.2M" sounds precise, but that precision is almost always an illusion. At the early stages of portfolio consideration, there is simply too much uncertainty to justify a single number. Presenting a single number doesn't eliminate the uncertainty; it just hides it from the people who need to make the decisions.
Thinking in ranges promotes intellectual honesty. Instead of committing to a cost or return as a single number that will likely be wrong, teams define a low-end, expected, and high-end figure that represents the best case, the expected case, and the potential worst case.
A cost range of $400K to $750K, with a requested budget in the funding period of $600K, and an ROI range of 0.8x–2.1x with an expected ROI at the requested funding level of 1.6x tells a far richer story than a single point estimate, giving portfolio leaders the information they actually need to compare initiatives and select those they will fund.
This approach acknowledges what is genuinely unknown: whether development will proceed smoothly or face as-yet unknown delays, whether adoption will be fast or slow,, whether the market will respond as expected, and so forth
Range-based estimates also change the quality of the conversation in the room. When every initiative shows up with a tidy number, the discussion becomes a competition of confident-sounding assumptions. When initiatives show up with ranges, teams naturally start asking what drives the spread. That is exactly the right question. Understanding what would push an initiative toward its best or worst case reveals the key assumptions and dependencies that will determine whether it succeeds. That discussion is far more valuable than debating whether the ROI is 1.8x or 2.0x.
Finally, ranges create a more rigorous basis for portfolio-level decision making. A portfolio of initiatives where every estimate is a point value will almost certainly underperform its projections, because optimism bias consistently drives point estimates toward best-case assumptions. A portfolio built on ranges, with explicit recognition of upside and downside, allows leaders to make deliberate tradeoffs: accepting a wider range on a high-potential bet, and demanding a tighter range on initiatives that need to deliver reliably. That kind of nuanced, risk-aware thinking is what separates strategic portfolio management from a list of projects with spreadsheet math.
Does your team need to learn more about building range-based estimates? We can deliver online and in-person workshops based on our online course, Investment and Outcome Estimation. Contact us and let's find time to talk!