DesigningAlternate Solutions

How to find solutions that meet your requirements

2

Three Philosophical Statements

THERE ARE ALWAYS MULTIPLE

SOLUTIONS

FOR ANY GIVEN PROBLEM.

Every solution leads to a different set of problems.

Doing nothing is often the best solution.

Problem/Symptom/Solution Analysis

Research known solutionsfor each problem and symptom

Research rejected solutionsand analyze why

Brainstorm problems createdby each potential solution

Brainstorm additional solutions for each problem/symptom

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Expanding Solution Alternatives

1 2 3 4 5 6Statu

s C C P P ?

A P P P

B

C P C P

D P C

Improving Solution Coverage

Merge solutions to address multiple problems/symptoms

Tweak the selected solutions

to improve them

Develop pros and

cons of each

solution

2

Macro-level Solution Alternatives

Build

BuyInhouse

Outsource

Exercise: Evaluating Solution Alternatives

Strategic Value

Uniqueness

High Medium Low

High

Medium

Low

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Decision Analysis Defined

BABOK®: “Decision analysis is an approach to decision-making that examines and models the possible consequences

of different decisions. Decision analysis assists in making an

optimal decision under conditions of uncertainty.”

Decision Analysis Defined

WIKIPEDIA®:“Decision analysis (DA) is the discipline comprising

the philosophy, theory, methodology, and professional practice necessary to address important decisions in a formal

manner. Decision analysis includes many procedures, methods, and tools for

identifying, clearly representing, and formally assessing important aspects of a decision, for

prescribing a recommended course of action by applying the maximum expected utility action axiom to a well-formed representation of the

decision, and for translating the formal representation of a decision and its corresponding

recommendation into insight for the decision maker and other stakeholders.”

Decision Analysis Defined

TOM HATHAWAY:

“Decision analysis is an excuse for making the right decision.”

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Decision-making Approaches

RISKSTime requiredFacilitation skillsPotential for gridlock

RECOMMENDED USES

Individual commitment requiredBuy-in essentialHighly interdependent group

Consensus

RISKSWin-loseMinority disenfranchisedActive resistance

RECOMMENDED USES

Large groupsIndividual commitment irrelevant

Democratic

RISKSOnly decision-maker accountableFosters “Yes-man” mentality

RECOMMENDED USES

Deadline drivenPotential for stalemate

Consultative

RISKSRequires absolute authorityFosters dependence

RECOMMENDED USES

Emergency situationsNeed for speedNeed for secrecy

Directive

For decision analysis to succeed, the decision must be clearly articulated and known by all decision-makers.

Create a decision statement for the Blue Pacific Airways project.

Exercise: What Are You?

Decision Analysis Toolkit

Decision Tables / Trees

Grid Analysis

Pareto Analysis

Cost/Benefit Analysis

ROI Analysis

Weighted Tables

Weighted Multi Voting

Delphi Technique (Expert Opinions)Force Field Analysis

SWOT Analysis

Paired Comparison Analysis

Fishbone Analysis (Ishikawa diagrams)

Decision Trees

Do Action Y

Do Action Z

??

TA

BF

F T

F

Do Action X

C

T

DECISION TREE:Consider thesestatements:

If A and C are true, do X;but if C is false, do Y.

If A is false, check B. If B is true, do Z.

Fill in the rules part of the table on the next page.

This real business rule defines the actions that can occur with respect to a loan application.

The loan decision depends on the following:

If the current debt load plus the request is greater than 4 times their gross income, then deny the loan unless their credit is excellent and they have been on the same job for over 5 years. If this is the case, approve the loan but request a co-signer. If the total new debt is less than 4 times their gross income, and their credit is excellent or good, approve the loan. If they only have good credit and have been in their current job less than 5 years, approve with a co-signer. Otherwise, deny the loan.

Exercise: Decision Tables

Decision Conditions

Debt + Req < 4 * Income

T T T T T T T T F F F F F F F F

CR = Excellent T T T T F F F F T T T T F F F F

CR = Good T T F F T T F F T T F F T T F F

Same Job 5 years T F T F T F T F T F T F T F T F

Actions Rules

Deny Loan

Approve Loan

Co-signer Required

Worksheet: Decision Tables

Force Field Analysis

Force 1

Force 2

Force 3

Force 4

Strength Strength

100

3

50

15

153 15Factors opposing the changeFactors supporting the change

Paired Comparison Analysis

Identify a set of criteria that distinguish the solutions.

Weight the criteria by their relative importance.

Create a matrix listing potential solutionsas rows and criteria as columns.

Select a group of participants with the knowledge and authority to make decisions and assign each participant a vote (potentially weighted).

For each criteria, compare each solution with each other solution and allow the group to select the better of these two (ignoring all other options).

Paired Comparison Analysis Example

SOLUTIONS

CRITERIA:

WEIGHT:

Cost(5)

Short1

(3)Long2

(1)TOTA

L

Solution 1

Solution 2

Solution 3

Solution 4

Solution 5

Solution 61Short = Benefits that will be realized within 3 months of implementation2Long = Long-term benefits

Symptoms of Solved Problems Are Benefits

EXAMPLE

P. People who use the Eisenhower Tunnel forget to turn off their lights.

S. The cops and other officials are wasting their time helping tourists get their car started.

S. Tourists are upset because their car won’t start.

S. A lot of cars in the parking lot have their

lights on.Problems and Symptoms are starting points for Cost/Benefit analysis. Additional benefits need to be brainstormed.

Categories of Benefits

TANGIBLE

Return on Investment

Cash Flow Impact

(mathematically measurable, left-brain focus)

Categories of Benefits

INTANGIBLE(touchy-feely stuff, right-brain focus) External

(Corporate image, brand awareness, etc.)

Internal(employee satisfaction, future potential, etc.)

Without emotions, no decision is possible.

BP Air would like to expand its customer service from traditional phone and in-person to create a customer web site. This expansion would allow customers to manage aspects of their travel from reserving a flight to baggage retrieval at their final destination. As a plus service, we would like to help our customers book lodging and ground transportation from our secure internet site. book flights; make changes to existing flights, check-in and print boarding passes.

Our expectations are that this project will:• Lower Customer Service inbound calls (or at least shorten the calls)• Increase customer Check-in efficiency• Improve overall customer satisfaction• Reduce the current cost of Reservations sales• Increase Customer Retention by making it easy for customers to sign up for our

rewards program online

This project will encompass all work related to developing and provisioning the online reservation “booking” system for BP customers. However, it cannot involve any modifications or updates to the current airline database system. Also, it must interact with the database modernization project team to ensure compatibility.

Finance wants immediate full payment (or at least a 20% deposit) for flights booked online that accounts for all applicable taxes and service charges imposed by government, governmental agencies, airports, etc.

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Exercise: Vision Statement

Working in groups, identify benefits to justify the project on the opposite page.

Divide your list of benefits into “Tangible” and “Intangible” benefits.

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Exercise: Blue Pacific AirwaysProject Benefits

Early Project Estimating

Points Based Estimates Requirements Impact Estimates

Corroborating Results

Comparison Estimating

Expert Estimator

and Risk Assessment as

Estimating

SWAG and Consensus Estimating

Don’t laugh. The Statistical Wild Anatomical Guess can provide excellent early project estimates.

WHO: A team member with relevant experience

WHAT: Two estimates, based on similar projects

HOW: Step 1. Understand the projectStep 2. Make a Lowest feasible estimate Step 3. Make a Highest reasonable estimateStep 4. Document your assumptions

SWAG’ing without relevant experience or understanding of the project.

POTENTIAL PROBLEM

The SWAG Estimate

What to Estimate

Operating Expense

Value Tangibles

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Cost/Benefit Analysis Factors

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consider future costs

Net Cash Flow Example

Years 0 1 2 3 4 5 Total

Revenue $0 $0 $2m $5m $9m $13m $29m

Cost ($9m)

($3m)

($.5m)

($.4m)

($.3m)

($.3m) ($13.5m)

Net Cash Flow

($9m)

($3m)

$1.5m

$4.6m

$8.7m

$12.7m

$15.5m

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Simple Return on Investment (ROI)

Years 0 1 2 3 4 5 Total

Revenue $0 $0 $2m $5m $9m $13m $29m

Cost ($9m)

($3m)

($.5m)

($.4m)

($.3m)

($.3m) ($13.5m)

Net Cash Flow

($9m)

($3m)

$1.5m

$4.6m

$8.7m

$12.7m

$15.5m

The simple ROI is the ratio of net cash flow divided by the initial investment. What is the simple ROI for this project?

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Simple Payback Calculation

The simple payback (aka: break-even point) is the period of time required to recover the original investment. What is the simple payback for this project?

Years 0 1 2 3 4 5 Total

Revenue $0 $0 $2m $5m $9m $13m $29m

Cost ($9m) ($3m) ($.5m) ($.4m) ($.3m) ($.3m) ($13.5m)

Net Cash Flow

($9m) ($3m) $1.5m $4.6m $8.7m $12.7m $15.5m

Internal Rate of Return (IRR)

FINANCIAL IMPACT

Option 1 Option 2

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Financial Performance Metrics: A Research Assignment

Net Cash Flow

Break-Even Point

Return on Investment (ROI)

Discount Rate Net Present Value

(NPV)

Internal Return Rate (IRR)

Economic Value Added (EVA)