A simple analytical approach to choice

hcrc arc iii;iny situations within iiid~i~tr),, or iiiclcctl within iiiost wallis T oi' life, wlicrc dccisioiis have t o bc iiiacic

l)ctwccn two o r iiiorc ~ ( I L I ~ S C S 0 1 xtioii . ' I b c p ~ " x s s oi' choicc may take tlic lor111 of a single iiidividual wrcstliiig with the pi-os u i d coiis or

the inattcu, altcrnativcly a i i ini-c tlciiioclntic proccss inay taltc p l x c involving consulratioii with ii variety 0 1 interested parties to arrivc at a co~~sc~ i s i i s view 1;,xaiiiph of such clioiccs might be:

Sclcction of a piccc of capital ccluipiiicnr Ti-o~~i

several altcrixitivc suppliers, to iulfil a par- ticular spccilic,ition. I<ccrtiitmcnt of a n intlivitlual froin a sliortlist or applicants to suit a particulu jol) spcciTic;i- tion. L)chitioii oi a product tcclinical spccifica- tion h,iscd on i n p u t s aiid wisli lists of v a r i o u s i n t c r c s d parties, e.g. sales and marltcriiig, tcclinical, manulacturiir~, iilaiiitciiniicc c ~ c . (:hoicc of a prcicrrcd supplier 11.01~1 scvcral potciitial suppliers hascd 011 their individual

(;rading of several individuals' pci-foriiiancc slrcngths alld wcakncsscs.

Tor salary awards etc.

by G. B. Sugden

A simple analytical mcthod is described that can bc uscd to assist thc decision proccss in making a. choicc bctwecii ;I nutnbcr of options.

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DECISION MAKING

Example l(a): Capital equipment selection criterion assessment

selection criterion number of points, apportioned out of

a total of 100

capital cost 45

training costs 5 throughput capability 10 quality 10 technology status 5 payback period

delivery 15 maintenance costs 5

5 __._

total 100

Very oCtcn dccisioiis s L d i as these arc quite casy to maltc. 'I'licrc iilay be a single overriding pat"mcr h i t governs the sclcction, sucli as price, availability or a particular nspcct of the technical spcciikation, which leads to an obvious choice. 'The clioicc tiiay also hc driven b y soiiic less tangihlc influcnccs such as pcrso i id gain, political prcssurcs etc.

', thcrc will bc occIisiotis wlicii choices have to bc made wlicii tlicrc arc a iiuiiihci- of important Iactors governing sclcc- tion. 't'licsc situations pwvidc an opportunity for tlic pcrson rcsponsiblc for malting thcsc decisions to cxcrt his autliority, for him to justly rely 011 past experience, with a imxsurc of gut rcactioii, and iiiakc l i i s choice soi i icwli i i t intuitively. Many iiiaixigcrs cl<iiin to bc good at this, aiid cnjoy doing it.

It may hc tlitit a pnrticular choice will nccil to

bc justilictl to t he iiiaiiagcmcnt, and in such Cascs well clioscii argutiicnts will nccd to he prcl"ud in advance, and the tool tlcscrihcd hem m;iy I)c L I S C ~ L I I I ~ applied in thcsc instances.

'I'lic writer has SLICCCSSILIII~ iiitlulgcd in all oC the foregoing methods of dccisioii maliing. I lowcvcl; there have hccii times when quite difficult dccisioi is have had to I)c madc, taking iiito accnLiiit '1 n L i i i i l x r oT factors, and where

c o ~ i s c ~ i s ~ i s opinion ,irrivcd at as part of the overall dccisiou malting 111-occss. hi- such cases a simple analytical approach has Lccn dcvclopcd, wliicli can act as a catalyst to the

ion-malting pm", by simply putting iiuiii1)crs LO it.

' h i s inctliod is carried out in t ~ o stages. It is ;in itlcal tool to LISC intcractivcly on a group hasis involving tlic team that is participating in

Icctioii proccss. Itlcally two sheets of a flip

scvcI-;l1 pcoplc 11ccdctl tO he cl,nsLlltcd and a

chart or a coll1~"Itc' s]"-c"'lshcct can he used to m;iiiiliulatc and collcct the results.

Stage 1: Sclcction cl-itcuion ratiliing I lie first step is to dccidc which sclcction

criteria affcct tlic choice, ant1 list thein all, cvcn iC they arc o n l y of minor importance. T h c n : ipprt ioi i a intiiibcr of points agaiiist each sclcctioii topic, in sucli a way as to rcClcct tlic rclativc importance of that i tem. ' l ' l i i s should he donc so d in t the total IiLiiiibcr ol'points ascribed to all the topics cq~ ia ls 100, i.e. 100 points arc shared OLIC Ixtwccn tlic sclcctioii parameters.

, 1

Example l(b): Equipment assessment against selection criterion

selection equipment No. 1 equlpment No. 2 equipment No. 3 crlterion points out of 10 points out of 10 points out of 10 capital cost delivery maintenance costs training costs throughput capability quality technology status uavback ueriod

Example 1 (c): Capital equipment weighted assessment

selection criterlon equipment No. 1 equipment No. 2 equipment No. 3

delivery 90 105 120

training costs 35 35 35 throughput capability 100 90 80 quality 60 70 100

capital cost 360 315 270

maintenance costs 20 30 40

technology status 40 35 30 payback period 40 25 25

total 745 705 7nn

266 LNGINEERING MANAGI MhNT JOURNAI 1317C17MI~I~I~ 2000

O n e approach hcrc i s to give cach itcm an equal number of points to start with (100 divided b y the n ~ i i n b e r of items). 7'lic i t c m sho t i l d t l icn he ranlicd i n ordcr of iiiiportaiicc, rohbing I'ctcr t o pay I'aul as the points arc adjustcd, and t l ic rclativc ranliiiig process proceeds. ' rhis i s an essentially iterative process which, wlicn coi i i - plctctl, sliould reflect the rclativc i i i iportancc of cacli sclcction criterion. The n~iiiihcrs s o ascribed wil l hc ~iscd later as weighting lactors.

1 " m p I c l(a) illustrat.cs tiow the process h i s bccn applicd to t h e purchase 0 1 an itcm oT capital cq~tipi~iciit. In t h i s particular cxamplc, thc LISCI' has dccidctl that the capital cost i s thc m o s ~ important itcm in t h e selection ci-itcrioii, and this has been apportioned 45 points out of thc total of 100. Chi t h e othcr ll'lntl, t l l C

niaintcnaiicc and training, tccIiiiol(igy statiis and payhaclt period ~ A V C for soI~1c I-c;iso11 h c t r given low and equal ranking of only 5 p o i n t s each, thcrchy leaving 35 points O L I ~ o l t h e 100 to he apportioncd to the rcniainiirg sclcctioii cr i tcr io i i itenis.

Jtxamplc ~ ( L L ) shows t h e process applied to job application sclccl ion ci-itcria. 1 n t h i s cxainplc the user lias dccidcd that d i rec t cxpcricncc merits a weighting of 35, wlicrcas oversetis c s p k " c i i i d potential for furthcr p i -omot io i i Iiavc bccn givcii cqi ia l imp,ortaiicc, with 15 points each.

Obviously, i f tlic examples given arc applict l to other situations t he sclcctioii critcria may cllangc, and the LIscr WOt l ld ;1IIoc;I1c new

Example 2(a): Job applicant selection criterion assessment

selection criterion number of points, apportioned out of

a total of 100

qualifications 5 direct experience 35 previous knowledge of product 5 potential for future promotion 15 remuneration demands 5 overseas experience 15 language skills i o aersonalitv 10

total 100

wciglitiiigs to xiit t l ic part icular application. 1)uring Stagc 1, 110 thought iiccds to bc givcii

to the re la t ive merits of the various caiitlidatcs Tor choice; this is covc.rccI only iii Stagc 2. 1 lowcvcr, thci-c may bc certain selection eritet-i'i that arc a l d u t c l y n imt la to i - y to sclcction ;uul

111 t l icsc crises, it mnkcs sctisc to cxclutlc m y inandati)ry sclccti;i ci-itci-ioii i'roni the present proccss, on Ilic hasis t h a t tlici-i. is no poiiit in coi isi i lcr i i rg candidate items lor sclcct ioi i il they do not tiicct ii mantlatory I-cquirci i ic i i t in tlic first place.

Stagc 2: Cantlidate itcm ranlting llsiiig ;I sccoiid woi-It slicct, dl tlic sclcction

cr i tcr io i i iicnis tlctci-miiicd ill Stagc i .~rc listed, hut t l ic weighting facrors arc n o t incluclcd. 'I'licsc S I I O L I ~ ~ I i c forgottc i i about f o r the t ime

d1cl-c t11c t1cgi-c~ coi1ipli;incc 11~s t~ I)c loo'%,.

Example 2(b): Job applicant assessment against selection criterion

selection applicant No. 1 applicant No. 2 criterion points out of 10 points out of 10 qualifications direct experience previous knowledge of product potential for future promotion remuneration demands overseas experience language skills aersonalitv

8 7 2 6 5

10 8 2

applicant No. 3 points out of 10

4 8 6 8 6 4 8 8

Example 2(c): Job applicant weighted assessment

selection criterion

qualifications direct experience previous knowledge of product potential for future promotion remuneration demands overseas experience language skills personality

total

applicant No. 3 - applicant No. 1 applicant No. 2

40 25 20 245 245 280

10 35 30 90 60 120 25 75 30

150 75 60 EO 70 EO

80 20 70

660 605 700 - ____ _________

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DECJSION MAKING

hcing. A coluiiiii is crcatetl i'oi- a c l i oC the caiididatc optioiis alongsidc thc selection criterion coluiiiii. Sec cxamplc I(/!) lor the sclcction of capital cq tiipiiicnt.

Working across the slicct a row at a time, assign points out of i 0 f o r cach canclitlate option tigainst c;ich of tlic selection critciia. Jlaoli each cantlitlate option against GICII otlicr for each selection criterion, atid then ascribe poinrs against each. l'lic points allocated sliould bc chosen s o ;is to rcilcct this comparative asscsstiiciit. Each cell of this matrix can hive any number of points tip to a iii~lxiiiiuiii o i 10. Some c;indidatc cells may possibly scorc c q t d numhcrs 0 1 points in sonic of

clfccts. This is quite .I legitimate and uscfLil cxcrcisc md it is an essential part of this quaiititativc decision malting proccss.

In cxamplc2(c), job applicaut No. I may havc bccn the O l l C that \VOLIld havc been chosc11 basctl on tlic sclcctor's experience and 'fccl' alone. Ilowcvcr, ;ipplicatit No. 3 has the most points bccausc lie came over with much more cliarisina than the other two applicants, in which case a rc;isscssiiiciit of the weighting applied to 'pci-sonality' may require some atljustmciit in favour o f tlic ot l icr selection critcria. i t is not tiiiLisua1, arid quite disturbing fol- sonic ~iscrs of this process, for this liiiid of

the selection categories if they

cxamplc 2(b) , \vhcrc two job applicants (I and 2) liavc both scorcd cqt id lp 011 direct cxpci-iciicc arid rcni tiiicl-atioii (Iel11;llldS.

Analysis of wcightctl rcsults

After thc Stage 2 matrix (c;iudidatc i t em ranking) has hccn complctctl, tlic points allocatecl OII this mntrix slioultl he iiiultiplictl by tlic approixiatc weighting factors ~lctcriniiicd in Stage I (selection criterion r;itiliiiit!l

arc cvcnly matchcd. sec It is a useful tool

for focusing minds in a group

situation, and always ensures

that good debate takes place Bfl

the merits and demerits of the

options <,,

Sec csaiiiplc I(c) wlicrc cq~~ipiiiciit No.1 has ii scorc of 360 for capital cost, this being the product of the wcightiiig factor 4.5 and t l ic 8 poinrs scorcd out of i 0, using the valucs irom tlic corrcspontling cell positions in charts [('L) and 1 (b), respectively.

'L'liis can Le quite an iiitcrcstiiig stage hccausc it may not yet be clcni- which particular optioii IS going to win. If this cvaluation pi-occss is being carried out on a group basis, you will hc guarantcctl the undivided attention of all the participating niciiil~crs duriiig this part of tlic proccdurc. l 'hc resulting weighted columns arc then totalled ancl the rclarivc iiicrits of cacli option arc reVCaled. l ' l ic successful one is the one witli the most points.

'This 1-csttlt may ~ o ~ i i c t i t ~ i c ~ conilict with the gut iccl choice, which iiiiglit otlicrwisc liavc bccn used on its own. 111 tlicsc cases it is ;is \vcll to go back aiid review tlic Stage 1 wcightings and, ii necessary, the Stage 2 allocntion of points, and l i d out why. If thought iicccssary, c1i;iiigc sonic of tlic valucs and obscrvc the

. .

iteration to be clone, and for t l ic original selection still to p rcvd .

Iliglitly or wrongly a clioicc will liavc ctiicrgccl, and it is oiic that can now 1x2 j tistiriccl and quantified if callctl to PCCOLIII~. Lilw

the method docs not always worlt well, and certain individuals \vho liavc hcco party to its use in the past liavc seriously doubtcd the rcsLilts it has ~ ~ r o d ~ i c c d ,

liavc participitctl in puttiiig iiiiiii1)crs into the cells. Ncvcrthclcss. it i s a useful

m;lny' managcmcllt tools,

e\" LhoLIgh they may

tool for focusing iiiiiids in a group situation,

on tlic nicrits atid ctcmcrits of the various options. With t l icsc results it is also easy to run sonic 'what if' scenarios, e.g. what would the choice of capital cquipmciit he if price was ignored.

1 lie writer has certainly found tlic technique usciul io specific iiistaiiccs of selecting capital cquipnicnt, recruiting and grading tcchnical staff', ancl also for deriving new electric tiiotor specifications against mnrltct rcquircmcnts ancl tlic coinpetition.

I alii remintled oi' an old adagc that I learnt wlicn i was training as a yot~iig electrical machine dcsigiicI.: 'sonic rulc is 1)cttcr than 110 rulc at all'.

and always cllSLlrcs tl1at good dchatc taltcs ]'lace

I <

268