What is Decision Matrix or Decision Making Matrix ?
Decision Matrix Definition
Imagine you are in the market to buy a new house and there are several options available to you. You go thru all those options and pick your top 5 or 10 options which is fairly easy. The hard part is choosing the one final choice from the top N. Since you are going to buy only one house and going to live there for the next several years, you can’t simply choose one randomly based on gut feelings or recommendations from realtors. Decision matrix will help you decide your final choice rationally and be confident about it.
When you have several options available to you then you use decision matrix to compare these options against selection criteria in order to make an objective choice. This involves deciding what criteria are most important and then using them as a basis for reaching an acceptable decision. The alternate solutions are each compared against the selection criteria, and then the options are scored for each criterion. The team uses the final ranking as an input to their decision making.
The Method – How to create and use decision making matrix
Develop a list of the top several alternative solutions.
Develop relevant, specific selection criteria against which the alternatives will be scored. Use weighting for the more important criteria. Separate the criteria into Musts and Wants.
Create a matrix, with alternatives across the top and the Must/Want criteria down the left side. The Musts all have to be satisfied. The Want criteria should each be assigned an Impact weighting value from 1 to 10, with 10 being the most important.
Score the alternatives against the criteria. Musts are mandatory. The Wants for the remaining alternatives are scored on a 1 to 10 basis. If an alternative provides a complete/best solution to the Want, it scores a 10. Multiply the score by the Impact value for that Want. Total the scores for each alternative.
Consider looking at the better features of the various alternatives to see if a new and even better solution can be synthesized, i.e. with the best features of different solutions can be combined together for a completely new solution.
This resulting matrix is called Decision Matrix or Grid Analysis Matrix, Pugh Matrix Analysis, and Multi-Attribute Utility Theory
The house on Princess Street not only met all the musts, but it scored the highest on the Wants. Hence we can decide to go with choice.
For each Want, we come up with a score for each house that first has met all of the Musts. The 1-10 score for each house is multiplied by the 1-10 weighting Impact for that Want. The higher the score for a house, the better it meets that Want. The Impact weightings pertain only to the significance of each Want.
Why was the Bendejo street house not even scored?
Because it did not meet one of the Musts. It was over $300,000.
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