4.4. DECISION ANALYSIS AND RESOLUTION

Purpose

The purpose of Decision Analysis and Resolution (DAR) is to analyze possible decisions using a formal evaluation process that evaluates identified alternatives against established criteria.

Introductory Notes

The Decision Analysis and Resolution process area involves establishing guidelines to determine which issues should be subjected to a formal evaluation process and then applying formal evaluation processes to these issues.
A formal evaluation process is a structured approach to evaluating alternative solutions against established criteria to determine a recommended solution to address an issue. A formal evaluation process involves the following actions:
· Establishing the criteria for evaluating alternatives
· Identifying alternative solutions
· Selecting methods for evaluating alternatives
· Evaluating the alternative solutions using the established criteria and methods
· Selecting recommended solutions from the alternatives based on the evaluation criteria
Rather than using the phrase “alternative solutions to address issues” each time it is needed, we will use one of two shorter phrases: “alternative solutions” or “alternatives.”
A formal evaluation process reduces the subjective nature of the decision and has a higher probability of selecting a solution that meets the multiple demands of relevant stakeholders.
While the primary application of this process area is to technical concerns, formal evaluation processes can also be applied to many nontechnical issues, particularly when a project is being planned. Issues that have multiple alternative solutions and evaluation criteria lend themselves to a formal evaluation process.
Trade studies of equipment or software are typical examples of formal evaluation processes.
During planning, specific issues requiring a formal evaluation process are identified. Typical issues include selection among architectural or design alternatives, use of reusable or commercial off-the-shelf (COTS) components, supplier selection, engineering support environments or associated tools, test environments, delivery alternatives, and logistics and production. A formal evaluation process can also be used to address a make-or-buy decision, the development of manufacturing processes, the selection of distribution locations, and other decisions.
Guidelines are created for deciding when to use formal evaluation processes to address unplanned issues. Guidelines often suggest using formal evaluation processes when issues are associated with medium to high risks or when issues affect the ability to achieve project objectives.
Formal evaluation processes can vary in formality, type of criteria, and methods employed. Less formal decisions can be analyzed in a few hours, use only a few criteria (e.g., effectiveness and cost to implement), and result in a one- or two-page report. More formal decisions may require separate plans, months of effort, meetings to develop and approve criteria, simulations, prototypes, piloting, and extensive documentation.
Both numeric and non-numeric criteria can be used in a formal evaluation process. Numeric criteria use weights to reflect the relative importance of the criteria. Non-numeric criteria use a more subjective ranking scale (e.g., high, medium, or low). More formal decisions may require a full trade study.
A formal evaluation process identifies and evaluates alternative solutions. The eventual selection of a solution may involve iterative activities of identification and evaluation. Portions of identified alternatives may be combined, emerging technologies may change alternatives, and the business situation of vendors may change during the evaluation period.
A recommended alternative is accompanied by documentation of the selected methods, criteria, alternatives, and rationale for the recommendation. The documentation is distributed to relevant stakeholders; it provides a record of the formal evaluation process and rationale that are useful to other projects that encounter a similar issue.
While some of the decisions made throughout the life of the project involve the use of a formal evaluation process, others do not. As mentioned earlier, guidelines should be established to determine which issues should be subjected to a formal evaluation process.
Related Process Areas
Refer to the Project Planning process area for more information about general planning for projects.
Refer to the Integrated Project Management process area for more information about establishing the project’s defined process. The project’s defined process includes a formal evaluation process for each selected issue and incorporates the use of guidelines for applying a formal evaluation process to unforeseen issues.
Refer to the Risk Management process area for more information about identifying and mitigating risks. A formal evaluation process is often used to address issues with identified medium or high risks. Selected solutions typically affect risk mitigation plans.

Specific Goal and Practice Summary

SG 1 Evaluate Alternatives
SP 1.1 Establish Guidelines for Decision Analysis
SP 1.2 Establish Evaluation Criteria
SP 1.3 Identify Alternative Solutions
SP 1.4 Select Evaluation Methods
SP 1.5 Evaluate Alternatives
SP 1.6 Select Solutions

SG 1 Evaluate Alternatives

Decisions are based on an evaluation of alternatives using established criteria.

Issues requiring a formal evaluation process may be identified at any time. The objective should be to identify issues as early as possible to maximize the time available to resolve them.

SP 1.1 Establish Guidelines for Decision Analysis

Establish and maintain guidelines to determine which issues are subject to a formal evaluation process.

Not every decision is significant enough to require a formal evaluation process. The choice between the trivial and the truly important will be unclear without explicit guidance. Whether a decision is significant or not is dependent on the project and circumstances, and is determined by the established guidelines.
Typical guidelines for determining when to require a formal evaluation process include the following:
· When a decision is directly related to topics assessed as being of medium or high risk
· When a decision is related to changing work products under configuration management
· When a decision would cause schedule delays over a certain percentage or specific amount of time
· When a decision affects the ability to achieve project objectives
· When the costs of the formal evaluation process are reasonable when compared to the decision’s impact
· When a legal obligation exists during a solicitation
Refer to the Risk Management process area for more information about determining which issues are medium or high risk.
Examples of when to use a formal evaluation process include the following:
· On decisions involving the procurement of material when 20 percent of the material parts constitute 80 percent of the total material costs
· On design-implementation decisions when technical performance failure may cause a catastrophic failure (e.g., safety of flight item)
· On decisions with the potential to significantly reduce design risk, engineering changes, cycle time, response time, and production costs (e.g., to use lithography models to assess form and fit capability before releasing engineering drawings and production builds)

Typical Work Products

1. Guidelines for when to apply a formal evaluation process
Subpractices
1. Establish guidelines.
2. Incorporate the use of the guidelines into the defined process where appropriate.
Refer to the Integrated Project Management process area for more information about establishing the project’s defined process.

SP 1.2 Establish Evaluation Criteria

Establish and maintain the criteria for evaluating alternatives, and the relative ranking of these criteria.

The evaluation criteria provide the basis for evaluating alternative solutions. The criteria are ranked so that the highest ranked criteria exert the most influence on the evaluation.
This process area is referenced by many other process areas in the model, and there are many contexts in which a formal evaluation process can be used. Therefore, in some situations you may find that criteria have already been defined as part of another process. This specific practice does not suggest that a second development of criteria be conducted.
Document the evaluation criteria to minimize the possibility that decisions will be second-guessed, or that the reason for making the decision will be forgotten. Decisions based on criteria that are explicitly defined and established remove barriers to stakeholder buy-in.

Typical Work Products

1. Documented evaluation criteria
2. Rankings of criteria importance
Subpractices
1. Define the criteria for evaluating alternative solutions.
Criteria should be traceable to requirements, scenarios, business case assumptions, business objectives, or other documented sources. Types of criteria to consider include the following:
· Technology limitations
· Environmental impact
· Risks
· Total ownership and lifecycle costs
2. Define the range and scale for ranking the evaluation criteria.
Scales of relative importance for evaluation criteria can be established with non-numeric values or with formulas that relate the evaluation parameter to a numeric weight.
3. Rank the criteria.
The criteria are ranked according to the defined range and scale to reflect the needs, objectives, and priorities of the relevant stakeholders.
4. Assess the criteria and their relative importance.
5. Evolve the evaluation criteria to improve their validity.
6. Document the rationale for the selection and rejection of evaluation criteria.
Documentation of selection criteria and rationale may be needed to justify solutions or for future reference and use.

SP 1.3 Identify Alternative Solutions

Identify alternative solutions to address issues.

A wider range of alternatives can surface by soliciting as many stakeholders as practical for input. Input from stakeholders with diverse skills and backgrounds can help teams identify and address assumptions, constraints, and biases. Brainstorming sessions may stimulate innovative alternatives through rapid interaction and feedback. Sufficient candidate solutions may not be furnished for analysis. As the analysis proceeds, other alternatives should be added to the list of potential candidate solutions. The generation and consideration of multiple alternatives early in a decision analysis and resolution process increases the likelihood that an acceptable decision will be made, and that consequences of the decision will be understood.

Typical Work Products

1. Identified alternatives
Subpractices
1. Perform a literature search.
A literature search can uncover what others have done both inside and outside the organization. It may provide a deeper understanding of the problem, alternatives to consider, barriers to implementation, existing trade studies, and lessons learned from similar decisions.
2. Identify alternatives for consideration in addition to those that may be provided with the issue.
Evaluation criteria are an effective starting point for identifying alternatives. The evaluation criteria identify the priorities of the relevant stakeholders and the importance of technical, logistical, or other challenges.
Combining key attributes of existing alternatives can generate additional and sometimes stronger alternatives.
Solicit alternatives from relevant stakeholders. Brainstorming sessions, interviews, and working groups can be used effectively to uncover alternatives.
3. Document the proposed alternatives.

SP 1.4 Select Evaluation Methods

Select the evaluation methods.

Methods for evaluating alternative solutions against established criteria can range from simulations to the use of probabilistic models and decision theory. These methods need to be carefully selected. The level of detail of a method should be commensurate with cost, schedule, performance, and risk impacts.
While many problems may need only one evaluation method, some problems may require multiple methods. For instance, simulations may augment a trade study to determine which design alternative best meets a given criterion.

Typical Work Products

1. Selected evaluation methods
Subpractices
1. Select the methods based on the purpose for analyzing a decision and on the availability of the information used to support the method.
For example, the methods used for evaluating a solution when requirements are weakly defined may be different from the methods used when the requirements are well defined.

Typical evaluation methods include the following:
· Modeling and simulation
· Engineering studies
· Manufacturing studies
· Cost studies
· Business opportunity studies
· Surveys
· Extrapolations based on field experience and prototypes
· User review and comment
· Testing
· Judgment provided by an expert or group of experts (e.g., Delphi Method)
2. Select evaluation methods based on their ability to focus on the issues at hand without being overly influenced by side issues.
Results of simulations can be skewed by random activities in the solution that are not directly related to the issues at hand.
3. Determine the measures needed to support the evaluation method.
Consider the impact on cost, schedule, performance, and risks.

SP 1.5 Evaluate Alternatives

Evaluate alternative solutions using the established criteria and methods.

Evaluating alternative solutions involves analysis, discussion, and review. Iterative cycles of analysis are sometimes necessary. Supporting analyses, experimentation, prototyping, piloting, or simulations may be needed to substantiate scoring and conclusions.
Often, the relative importance of criteria is imprecise and the total effect on a solution is not apparent until after the analysis is performed. In cases where the resulting scores differ by relatively small amounts, the best selection among alternative solutions may not be clear cut. Challenges to criteria and assumptions should be encouraged.

Typical Work Products

1. Evaluation results
Subpractices
1. Evaluate the proposed alternative solutions using the established evaluation criteria and selected methods.
2. Evaluate the assumptions related to the evaluation criteria and the evidence that supports the assumptions.
3. Evaluate whether uncertainty in the values for alternative solutions affects the evaluation and address as appropriate.
For instance, if the score can vary between two values, is the difference significant enough to make a difference in the final solution set? Does the variation in score represent a high risk? To address these concerns, simulations may be run, further studies may be performed, or evaluation criteria may be modified, among other things.
4. Perform simulations, modeling, prototypes, and pilots as necessary to exercise the evaluation criteria, methods, and alternative solutions.
Untested criteria, their relative importance, and supporting data or functions may cause the validity of solutions to be questioned. Criteria and their relative priorities and scales can be tested with trial runs against a set of alternatives. These trial runs of a select set of criteria allow for the evaluation of the cumulative impact of the criteria on a solution. If the trials reveal problems, different criteria or alternatives might be considered to avoid biases.
5. Consider new alternative solutions, criteria, or methods if the proposed alternatives do not test well; repeat the evaluations until alternatives do test well.
6. Document the results of the evaluation.
Document the rationale for the addition of new alternatives or methods and changes to criteria, as well as the results of interim evaluations.

SP 1.6 Select Solutions

Select solutions from the alternatives based on the evaluation criteria.

Selecting solutions involves weighing the results from the evaluation of alternatives. Risks associated with implementation of the solutions must be assessed.

Typical Work Products

1. Recommended solutions to address significant issues
Subpractices
1. Assess the risks associated with implementing the recommended solution.
Refer to the Risk Management process area for more information about identifying and managing risks.
Decisions must often be made with incomplete information. There can be substantial risk associated with the decision because of having incomplete information.
When decisions must be made according to a specific schedule, time and resources may not be available for gathering complete information. Consequently, risky decisions made with incomplete information may require re-analysis later. Identified risks should be monitored.
2. Document the results and rationale for the recommended solution.
It is important to record both why a solution is selected and why another solution was rejected.