Choosing by Advantages Decision-Making System

Developed by Kendra Ana Rodríguez López

Summary/Abstract

This article aims to provide a deeper insight into the Choosing by Advantages Decision-Making System. The model described in this article is a collaborative and transparent decision making system developed by Jim Suhr in 1999.

The basis for the whole methodology relies on providing assistance to simplify the decision-making process. With this tool, decision-makers can reach consensus, focus on outcomes, and understand all of the factors considered during the decision-making process. For instance, it is useful to apply the CBA system in situations where it is complex to have a clear visualization of the proper decision to take. It must be mentioned that decision-making often involves the decision-makers' personal interests, intuitions and emotions, which can sometimes lead to a domination of the personal interests among the rational decisions.

In order to assess this issue, multiple tools can be used to facilitate the decision-making procedure. The main objective of this technique is to apply this type of methodology in any case that involves making an important decision. This means that it is suitable for either big or small companies, as it supports sound decision-making by using comparisons among advantages of the diverse alternatives. Furthermore, the CBA system involves a multiple step procedure that aims to facilitate the implementation of the tool. The first step involves defining the existing issues, the second one aims to identify the alternatives, the third one describes the advantages of each alternative, the fourth involves reviewing the decision and the last one consists on executing the implementation. The implementation of these steps is flexible, meaning that can be removed or combined depending on the situation they are applied. Furthermore, it must be highlighted that the decision-making techniques such as the CBA not just evaluate the advantages, but also can be useful to identify and assess the possible risk of each alternative. As a result, decision-making techniques can help prioritize risk response strategies.

Introduction

The Choosing by Advantages methodology is a tool used in the decision-making stage. This stage is included in a selection phase where it is made transparent what are the options to choose from, how are they evaluated and how a decision for one solution is reached. The selection is then divided into two different but correlated parts; the "evaluation" and the "decision". With this, it is intended to prepare the decision by gathering all the relevant information involved so that the actual decision can be taken.

In order to understand the whole technique, it is necessary to comprehend its background. The basis for it relies on the fact that outcomes are mainly caused by actions, which at the same time are caused by decisions. As a consequence, if the decisions are improved, the outcomes will achieve higher levels of success.

Visualisation of the CBA's background.

Importance in Program, Portfolio and Project Management

The decision-making stage appears in any procedure that involves differentiating between diverse alternatives in order to find the most suitable one. It is the case of the Program, Portfolio and Project Management, as it involves assessing alternatives, making decisions and evaluating risks in order to stick to the budget while choosing the best option for the project. When making a decision, different factors must be considered, and one of the most relevant ones is balancing risks. Risk appetite of the key portfolio stakeholders in terms of balance between opportunities and threats is a factor that needs to be taken into account when managing portfolio risk. The tradeoffs between threats and opportunities, short- and long-term impacts, and environmental considerations have a fundamental impact on the selection or termination of portfolio components. In addition, the absence of a deterministic environment makes the decision-making process more difficult due to the uncertainties that limit effective response strategies. In most cases, the portfolio manager is faced with several suboptimal solutions where all solutions have various strengths and weaknesses, but there is no clear path to an optimized management approach. When having to face these kind of situations, the decision-making tools facilitate the process of selection.

Definition of the methodology

To begin with the description of this methodology, it is important to first define some key words that this tool considers along the whole methodology.

Definition of key words according to Jim Suhr (1999).

In order to reach a decision, two preconditions have to be met: the evaluation of alternatives needs to be completed and the decision-makers need to have the authority to make the decision. Typically the decision makers and the designer of the system are not the same people. Implementing new solutions often leads to interferences with and changes to existing systems that have substantial consequences. The designers of the system typically cannot have the authority to decide on these consequences. The process of making a decision can be divided as:

• Presentation of alternatives: Must be presented neutrally to the decision-makers.
• Evaluation of the alternatives: Subsequently the evaluation of the alternatives has to be presented. This includes the selected criteria, the evaluation methods, together with the reasons for their selection and application. In this phase, decision-makers might want to impose different values or add additional knowledge.
• Decision-making: Apart from the results of a formal evaluation, the decision-makers’ personal interests, intuitions and emotions are part of the decision.
• Rationale: Specifically stating the rationale for a decision supports rational and auditable decision-making.
• Documentation: A clear presentation of the reasons and the considerations that led to a decision are the basis for a smooth implementation of the selected solution.

Choosing By Advantages is a sound system to make decisions using well-defined vocabulary to ensure clarity and transparency in the decision-making process. Making sound decisions aids in successful implementation of the decision the suits the most. CBA, allows the engineer to explicitly consider multiple alternatives that meet various 'must' and 'want' criteria. The factors and criteria developed to evaluate the decision alternatives reflect the values of the various project team members involved in the process of making the decision. Because decision-making is subjective, it is important to document why and on what basis decisions are made so they can be revisited at a later time on that project, should new considerations or facts become available, and on future projects. Decision-makers using CBA list the attributes and advantages (the beneficial difference between two alternatives) of each alternative and then assign a degree of importance to each advantage relative to the one that is least preferred. In addition, the tool itself involves key definitions, models and principles. There are four key principles:

1. Decisions must be based on the importance of the beneficial differences between alternatives.
2. Decisions must be linked to relevant facts.
3. Different types of decisions require different sound methods of decision-making.
4. Decision-makers must learn and skillfully use sound methods of decision-making.

As it can be observed from the description of the principles above, the third one involves a number of diverse methods for different types of decisions. Those vary from simple binary decisions with no resource implications to complex ones with many alternatives each with its own set of resource implications. It must be considered that the CBA avoids the pitfalls of unsound methods such as Kepner-Tregoe, choosing by pros and cons, using advantages and disadvantages, pair-wise comparison and weighting rating and calculating (WRC) systems including criteria weighting, factor weighting & cost-benefit analysis.

CBA Methods

This concise sub-section aims to briefly mention the existing methodologies of the CBA tool. Depending on the complexity or the simplicity of the decision that must be made, the method that must be applied differs. It must be stated, that this article focus on a general overview of the CBA technique, meaning that it does not go into detail with the methods that will be mentioned below.

Special Methods for Complex and Very Complex Decisions

• Special Methods for Money Decisions.
• Other Special Methods for Complex and Very Complex Decisions.

Simple Methods for Simple Decisions

• The Tabular Method.
• The Two-List Method.
• The Simplified Tabular Method.
• The Simplified Two-List Method.
• Instant CBA.

Very Simple Methods for Very Simple Decisions

• The Recognition-Response Process.
• Other Very Simple Methods for Very Simple Decisions.

Steps

In order to apply this decision-making methodology, it is important to facilitate to all the people involved in the procedure, useful training or mentoring to ensure that the implementation of the tool is as simple and efficient as it is supposed to be. To confirm that the whole process is covered, the CBA process is described. This procedure involves a five-step criteria where the tool is divided into five different stages.

1. Stage Setting Phase. The first stage focuses on defining the objective and identifying the issues.

2. Innovation Phase. In the second step it is intended to recognize the alternatives in order to evaluate or determine the main differences between each of them.

3. Decision Making Phase. The third phase provides a list of the main advantages of each option in order to decide which alternative has the most beneficial outcome. The following sub-steps can be helpful to succeed in this stage:

1. Summarize the attributes of each alternative.
2. Decide the advantages of each alternative.
   • Select the least-preferred attribute in each of the factors.
   • Identify the differences between those attributes, so that those differences become the advantages.
3. Decide the importance of each advantage.
4. Choose the alternative with the greatest total importance of advantages.

4. Reconsideration Phase. The fourth stage basically involves reviewing the draft decision, so that all the options have been properly evaluated prior to committing to the final choice.

5. Implementation Phase. The last step assesses what to do in order to apply the final decision.

By splitting the methodology in these five steps it is assured a successful implementation of the Choosing By Advantages system. It is crucial to perform a correct identification stage in order to assess all the possible alternatives and their advantages. For this reason, the third step can be considered as one of the most important phases of the whole process.

Steps of CBA according to Jim Suhr.

Application

When referring to the application of the tool, it has been stated previously that the technique described is relevant as well as useful for any decision-making process. As a result, it can be applied in any kind of companies, big or small, as well as in any department or team. It is a methodology that it is independent in which field or area the company or the organization is specialised in. For instance, it can be implemented in any decision, such as the following ones:

• Deciding whether or not to bid or accept a contract.
• Selecting and managing projects and programs.
• Selecting consultants, contractors, and suppliers.
• Selecting and purchasing materials, equipment, and other products.
• Choosing combination of design alternatives.
• Choosing between competing alignments for road and rail projects.

As it can be observed, the examples presented above differ completely from each other, meaning that CBA can be applied to any decision. However, it is important to offer some training to learn how to use it. For instance, CBA basics are being taught in primary and secondary schools in the US.

The Choosing By Advantages offers a systematic way for all stakeholders to manage the process of deciding between large numbers of alternatives without being overwhelmed. In addition, it ensures that the number of alternatives considered in the complex decisions is not artificially limited. The tool creates an open, transparent and auditable decision process that acknowledges the complexity of most projects. The methodology that is being presented is also well able to handle both objective and subjective data within a single decision process.

Limitations

It has been clearly stated during the whole article that the CBA methodology is an easy tool that can be implemented and used in any case that involves making a decision. However, some limitations can be found regarding the application of this decision-making system.

• When talking about sustainable decision-making, not all the manufacturers have an Environmental Product Declaration, in which the data collection can be challenging.
• Intensive time may be used in data collection.
• May be not possible to get all stakeholders together Face-to-Face in the same room at the moment of the decision.
• Time for analysis can exceed the expectation of the team.

These are some examples of situation in which can be challenging or even impossible to apply the CBA methodology, but it must be highlighted that every project is different, special requirements and different people involved, which means that it may work for one particular study case but not for another.