# Project Cost Threshold

The Project Cost Threshold field determines the amount of the project cost (expressed as a decimal percentage) that must be within the budget constraint to be included in the priority ranking. To better understand how this works, say an agency has the following five projects with the assigned priorities and costs:

Project Name

Project Cost

Project Priority

Project 1

\$2,000

190

Project 2

\$3,000

90

Project 3

\$1,000

150

Project 4

\$500

20

Project 5

\$1,800

70

The agency wants to rank these projects by priority with a budget constraint of \$4,400. The first part of the analysis is to simply rank the projects by priority. This results in the projects being sorted into the order shown in the following table:

Project Name

Project Cost

Project Priority

Project 1

\$2,000

190

Project 3

\$1,000

150

Project 2

\$3,000

90

Project 5

\$1,800

70

Project 4

\$500

20

If the budget was unlimited, the analysis could stop here and all the projects would be in the ranking. However, since the budget is constrained to \$4,400, the analysis engine must consider whether a project can be included in the ranking based upon the cost of the project. The criterion for whether a project can be included in the ranking is the setting of the Project Cost Threshold field, which determines the percentage of the project cost that must be within the budget constraint to be included in the ranking.

The analysis engine takes each project in priority order, adds the cost of the project to the running total, and compares the new running total to the budget constraint. If the new running total exceeds the budget constraint, the analysis engine multiplies the project's cost by the setting of the Project Cost Threshold field, adds the resulting value to the running total cost of all projects, and evaluates whether the new running total exceeds the budget constraint. If it does not exceed the budget constraint, analysis continues; if it equals or exceeds the budget constraint, analysis stops.

The following table shows three settings for the Project Cost Threshold field and notes which projects will be included in the project because of the value of this field.

Value of the Project Cost Threshold (PCT) Field

Projects Included in the Ranking

0.0
(This value results in the budget always being exceeded unless the list of projects is exhausted.)

Project 1 is included (\$2,000 ≤ \$4,400).
Project 3 is included (\$1,000 ≤ \$2,400 [remaining budget after including Project 1]).
Project 2 is included (while \$3,000 > \$1,400, the [PCT value * \$3,000] ≤ \$1,400).
Ranking stops because running total (\$6,000) exceeds budget constraint (\$4,400).

0.5
(This is the default value.)

Project 1 is included (\$2,000 ≤ \$4,400).
Project 3 is included (\$1,000 ≤ \$2,400).
Project 2 is not included (the [PCT value * \$3,000] > \$1,400).
Project 5 is included (the [PCT value * \$1,800] ≤ \$900).
Ranking stops because running total (\$4,800) exceeds budget constraint (\$4,400).

1.0
(This value results in the budget never being exceeded.)

Project 1 is included (\$2,000 ≤ \$4,400).
Project 3 is included (\$1,000 ≤ \$2,400).
Project 2 is not included (the [PCT value * \$3,000] > \$1,400).
Project 5 is not included (the [PCT value * \$1,800] > \$900).
Project 4 is included (\$500 ≤ \$900).
Ranking stops because list of projects is exhausted; budget constraint not reached.

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