Opportunity Cost

Opportunity Cost is the benefit of the second-best alternative which is not selected. This is not a direct expense but it shows what you miss gaining as a benefit.

Decision-making diagrams

One of the best examples of decision-making tools and techniques are decision diagrams.

Decision diagram displays:

• All possible alternatives

• Probability of success and failure

• Impact of the success and failure

• The amount of profit or loss based on a calculation

As you can see on the diagram if you select Vendor 1 you will have an average 18 000 USD profit and if you select Vendor 2 you will have an average 17 600 USD profit.

Decision-making software

All the above ideas are useful in the case of standard “manual” decision-making processes. But there is software that can ease decision-making and makes it automatic.

There are methods embedded in the software which defines the path to the decisions. The most popular of them is multi-criteria decision making (MCDM). I will not go very deep into description here but the problem is broken into hierarchy sub-problems, alternatives are defines and compare, a numeric score is applied, etc.

The most important software features are:

• Time analysis and optimization

• Pairwise comparison

• Sensitivity analysis

• Fuzzy logic calculations

• Risk aversion measurement

• Group evaluation

• Presentation tools

Here is the list with one of the best decision-making software and a short review of them:

The software defines alternatives to be considered by decision-makers, criteria by which the alternatives are compared and weight represented the importance of criteria.

1000Minds offers:

• Prioritization solution for alternatives and people in a consistent.

• Value for money solution – compare alternatives’ “value for money” and resource allocation.

• Conjoint analysis – research what matters to people when making trade-offs.

• Group decision-making module.

Link to the official site – 1000Minds.

D-Sight

D-Sight is decision support software in the domains of projects and alternatives prioritization, vendor selection, and group decision-making.

The main solution of the software are:

• Project portfolio optimization tool – collect and centralize data for project & alternative requests, set priority, and allocate resources.

• CDM – collaborative decision-making tool

• A strategic sourcing analysis tool

The company offers consultancy services to all kinds of customers as IT companies, health-care companies, building enterprises, etc.

Official D-sight website.

Decision Lens

Decision Lens is one of the best decision-making tools.

It offers prioritization of the technologies that provide better business decision-making, enhances Big Data analysis, increases IT security.

Decision Lens provides performs dynamic analysis of money flows, budget, and resource allocation scenarios to reduce long-term costs.

This software helps to define the most profitable alternatives, to defend your decisions, and to have maximum benefits.

It is an excellent tool when you need to choose innovation selection with fast scenario planning, trade-off analysis, and powerful visual analytics.

Expert Choice

One of the best decision-making software which offers many useful features.

Expert Choice has a comparison solution for the prioritization of alternatives and resource allocation. The software compares alternatives, projects, vendors, products, marketing strategies, trade studies, and many others.

It offers risk management solutions for risk assessment and prioritization.

Expert Choice supports collaborative decision-making and aligning with decisions to the company’s strategic goals.

Link to the official Expert Choice site.

Group decision-making techniques

There are many group decision-making technique and here I will mention some of the most popular ones:

Focus Group – It is a useful qualitative decision-making technique. A group of preselected experts or stakeholders is brought together with a facilitator who explains the problems and alternatives, asks questions about the stakeholder’s expectations for the end solution. Just remember that the focus group should have experts from different areas.

Facilitated Workshops – similar techniques as Focus Groups. Facilitated Workshop brings together key stakeholders involved in an important decision and reaches agreements. This is especially critical for consensus building and when selecting an alternative is required with inputs from multiple experts.

Group Creativity technique – The most common creativity techniques are Brainstorming, Nominal Group technique, Mind mapping, Delphi technique, Affinity diagrams. The purpose of all of them is to generate as many alternatives as possible and to prioritize them. Group Decision-making:

Group Decision-making – Once you have the alternatives you need to make a decision. There are some basic ways:

• Unanimity – Everyone must agree with the decision.

• Majority – at least 50% of the group members need to support the decision

• A plurality – the most supported decision is selected even if it is supported by than least 50% of members.

• Dictatorship – One individual makes the decision.

Decision-making problem-solving

During an alternative discussion, you can expect some conflict to arise. Different stakeholders might have different interests.

According to PMI, there are some common general ways to handle conflict situation:

• Avoiding – If some of the experts start arguing too often you can just separate them and not bring them in a meeting together.

• Smoothing – during conflict you can concentrate on the area of agreement.

• Compromising – every one of the conflicting experts sacrifices something to obtain a decision.

• Forcing – a person with authority pushes one or more of the experts and takes the decision.

• Collaborating – researching alternatives from different viewpoints to have an agreement.

• Problem-solving – treating the conflict as a problem and solve it due to open dialog and give-and-take attitude.

((Cre: https://www.businessphrases.net)