DECISION MAKING TECHNIQUES - The techniques of Decision making to select the best solution with more certainty

SKILL: Critical reflection, making decisions and problem solving 

EQF LEVEL (INTERNAL REFERENCE): EQF2

keywords 

1 DECISION MAKER

2 COSTS BENEFITS

3 GRID ANALYSIS

4 PAIRED COMPARISON ANALYSIS

5 DECISION TREES 

Introduction: 

By the end of this LU you will know the major decision making techniques and you will be given some tips to apply them in your daily life.

Content 

Each decision maker is actively involved in the choice process. This involves making accurate analysis of the situation using  a variety of techniques. The following are the most important ones.

• Cost and Benefit Analysis

This technique is intended to determine whether the proposed solution is valid, justifiable and feasible (i.e. whether the benefits outweigh the costs);

It  also provides a basis for comparing the various solutions by determining the degree of the benefit of each. This technique helps us decide whether or not it is worthwhile to undertake a certain change, by calculating the sum of all the benefits and subtracting the total cost of the change. 

    It is important to also keep in mind the following:

• How does it affect the users?
• Are there social benefits? 
• Are there benefits/costs that are not strictly economic? 

Remember that decisions affecting the well-being of people even if not quantifiable in terms of money carry a lot of weight. 

• Grid Analysis

This  is an intricate but relatively simple technique; it is best used  when you have several good alternatives to choose from and different factors to consider. 

In practice, the technique involves creating a table with the following features 

• Each row shows the possible choices;
• The columns  list the factors that need to be considered,  (cost, size, distance, customer service, etc.)
• Each column is assigned a score ranging from 1 to 10  - 10 being the highest score 
• Each row is assigned a similar score

For each row-column cell, we multiply the two scores; the row with the highest  score represents the most advantageous decision.

• Paired Comparison Analysis

The goal is to understand the importance of  different options.

The tool provides a framework for comparing each option to all the others and shows the  importance of the different  factors. In practice you need to:

• Create a list of options to compare
• Assign a letter to each option
• Create a table. List your options (with the letters) on the left hand column and on the top row of the table.In each blank cell, compare the options in the row with the options in the column, then write in the cell the option that is better and  assign it a score between 0 and 3.
• Repeat the process until all possible options have been chosen
•  Sum up all cell values for each option.
• Consider the options with the highest ranking.
• . 

• Flowchart 

The decision-making process is represented with an inverted logic tree, where each node is a conditional function (i.e., two or more alternatives are provided for each node-question). The process consists of continuous testing at each "node" and choosing the preferred answer or option each time. In practice it is necessary

• to draw a tree from an initial square creating a branch for each possible solution. 
• At the end of the branch a circle should be added (in case the outcome of that decision is uncertain), another square (in case the solution leads to another decision to be made) or nothing (in case the solution is neither uncertain nor leads to further decisions). 
• Once the entire tree is drawn, it is necessary to rate every alternative with a score (for  an example 1-10), and to indicate the probability of its validity for every sub-field of a circle or square node (keeping in mind that the sum of the sub-fields must always be 100%). 
• At this point we start at  the bottom  of the tree and go up  to the beginning as we calculate the value of each circle node and each square node: the option that identifies the largest benefit represents the best decision to take

TEST

• True or False

1. The decision maker selects the technique depending on the context 
2. The decision maker must be familiar with all existing techniques
3. The decision maker must employ the technique he or she knows best 

• Matching

Connect each decision making technique with the correct related phrase

• Analysis of the Costs and Benefits allows: to hold account also of the weight of every factor summarizing it in a grid table 
• Grid Analysis :The tool provides a framework to compare each option with all others and helps show the difference in importance between factors
• Paired Comparison Analysis : graphical tree tool for formulating and evaluating alternative choices 
• Flowchart sum: of all the benefits the change would bring, subtracting the total cost of the change 

• Gap Fill

The cost-benefit analysis technique involves an economic analysis of the situation but must take into account the impacts of the decision on people 

 Language Point

The Definitive Article

Look at the two sentences below. 

1. The decision-making process is represented with an inverted logic tree
2. At this point we start from the bottom end of the tree.
3. The row with the highest score represents the most advantageous decision.

All the above sentences use the Definite Article  for different reasons: 

1. to show that the listener/reader knows exactly what we are talking about, as in sentence 1;.

1. to show that  we are comparing something to a group of things, as in sentence 3;

1. to show a specific location, as in sentence 2.

Practice Exercise: 

Choose the correct words.

1. The chair was in the corner / in corner.
2. Who is president of France / the President of France?
3. He is the tallest / tall boy in the school.

Answers: 

1.  the corner; 2. the president; 3. the tallest