Trade-off Analysis Technique – Make the decision easier


In our daily tasks, personal or work related, we usually face a situation that we have a variety of alternatives and there is a need for a decision process to pick one of them and to decide what will be the best to choose with a certain level of confidence.

These decisions can range from changing your job,  selecting a candidate for a job vacancy, choosing the right software development life cycle, buy vs build decision or others. The common between all of them that they are decisions and they need a decision process.

image

In this article, we will discuss the process of trade-off analysis, and an example of different alternatives we need to select one of them.

The trade-off is a situation that involves losing one quality, aspect or amount of something in return for gaining another quality, aspect or amount.

The process

Trade-Off Analysis Process.png

Figure 1 – Trade-off analysis Process

The image above illustrates the process can be used during tradeoff analysis, The following sections will describe each step of them with considering the problem scenario below. I am using here a simple tradeoff problem which anyone can easily understand and relate.

The problem scenario

Consider that you would like to buy a new personal car and you have different alternatives and it is hard to decide which one is the best one for you.

Understand the context

It is obvious that you are in a situation of uncertainty, maybe you have a new project and do not know what is the best process to choose, or you are in a situation of having different COTs products and you need to choose which one you would like to use. More and more situations like this, which we are so doubtful and do not know what will be the best choice for this situation.

In this case, you need to understand what are the motives, drivers, objectives, requirements which led to having more than alternatives. Why did you consider these choices and not another one?

Who are the stakeholders for taking this decision, do they have any consideration or recommendations? Are they biased for something, for example, known technology, vendor, or process?

Do we have another internal or external factors, for example, resources, suppliers, environmental, legislative …etc that may affect the decision?

You can use any brainstorming tool to set all the thoughts and your research results and make them clearly visible to you or the team involved in making this decision.

At our scenario, you may have some requirements for the required car, for example, you need to be a luxury car or maybe a sports car. You may have some performance recommendations or preferences, for example, the existence of cheap spare parts, number of warranty years.

You can you have different stakeholders as well, like you and your family or you may want to choose the car for business purpose.

Define the alternatives

After analyzing and understanding the context, you will have some options, alternatives, or choices to choose from. Write them down, make sure that these are the complete choices you have, do not jump to conclusion and neglect any of them, let the numbers decide.

choices

At the car trade-off scenario, you may already have visited a lot of car dealers, and read about different cars model you want to have one of them and read their reviews. You may also already used one of car models and you want an upgrade your current car with a newer model.

We can select now Mercedes, BMW, and Audi as our alternatives. This is just an example to just illustrate the process.

Define the criteria

At this step, after you understand the context and define your requirements and the different alternatives you have, it is the time to define how you choose between them. This can be simply done by putting a list of the features you want which derived from the requirements you have. You can group them for better management and make weights for these groups to know which are important than others.

For our scenario here, we can have many criteria, for example, horsepower, tank capacity, fuel consumption, warranty years, and a lot more.

When you think about all the criteria you may find some of them are related together somehow, for example, fuel consumption and tank capacity can be grouped together. Moreover, horsepower and engine capacity can be grouped together.

Set the criteria weights

This is one of the most important steps, the weights can change the decision completely. So, you have to be careful setting these weights. If you are evaluating a solution or an implementation methodology, you may consider the early business value more than complexity for example, at this case you may give the business value criteria a higher weight.

At our car trade-off scenario, the engine power can be more important than the interior design. And we may consider the accessories criteria more important than the total cost criteria.

The list below is a sample of criteria I made for the car trade-off analysis, as you notice I made some sub-criteria and called them metrics and grouped them together to relate to main criteria and assigned a weight for each one of the criteria. You may have another opinion, the important is that the total summation of these weights should be equal 100%.

Criteria Metrics Weight
Engine
Origin Made
20%
Volume level
Capacity
Acceleration
Horsepower
Total
Warranty Number of years 5%
Total
Interior
Quality
10%
Noise cancellation
Leather Seats
Total
Accessories
Cruise controller
15%
Navigation
Parking sensors
Others
Total
Automatic gears 20%
Total
Shape
New shape
5%
Design
Total
Price
Total cost
15%
Instalment monthly cost
Maintenance Services
Total cost with installment
Total
Tank
Capacity
5%
Fuel Consumption
Total
Supplier
Quality
5%
Customer satisfaction
Distribution
Total
Final Total 100%

Table 1 – Criteria

Set the scores

After adding the weights for each criterion, you need to link the value of the metric to its criteria, how this metric is valued to another metric as well.

In the Car trade-off analysis, we need to distribute the value of 100 to all metrics inside each criterion, for example, the table below, for Engine criteria the volume level of the engine is the most valued metrics, I gave it 30, then I looked for next valued metric for me and so forth.

Criteria Metrics Weight Max Value
Engine
Origin Made
20%
10
Volume level 30
Capacity 20
Acceleration 20
Horsepower 20
Total
Warranty Number of years 5% 100
Total
Interior
Quality
10%
50
Noise cancellation 40
Leather Seats 10
Total
Accessories
Cruise controller
15%
15
Navigation 10
Parking sensors 15
Others 60
Total
Automatic gears 20% 100
Total
Shape
New shape
5%
60
Design 40
Total
Price
Total cost
15%
50
Instalment monthly cost 20
Maintenance Services 20
Total cost with installment 10
Total
Tank
Capacity
5%
20
Fuel Consumption 80
Total
Supplier
Quality
5%
30
Customer satisfaction 50
Distribution 20
Total
Final Total 100%

Table 2 – The metrics values

You may need to reanalyze your distribution after assigning all values to make sure that these are the correct values. The values are considered the maximum value you can give for each alternative. For example, you may like USA engines, then German engines, then Japanese. So, if one of the alternatives satisfied your engine preference you should give it the maximum value, if not you can give it a value between zero and the maximum value of the metric. At the complete table below, I assigned some random values just for illustration and they are not real.

Criteria Metrics Weight Max Value Mercedes BMW Audi
Engine
Origin Made
20%
10 10 10 5
Volume level 30 20 25 25
Capacity 20 20 20 20
Acceleration 20 15 15 20
Horsepower 20 15 10 15
Total 16 16 17
Warranty Number of years 5% 100 100 90 100
Total 5 4.5 5
Interior
Quality
10%
50 50 50 50
Noise cancellation 40 30 25 35
Leather Seats 10 10 10 10
Total 9 8.5 9.5
Accessories
Cruise controller
15%
15 15 15 15
Navigation 10 10 10 5
Parking sensors 15 15 15 15
Others 60 40 45 40
Total 12 12.75 11.25
Automatic gears 20% 100 90 80 100
Total 18 16 20
Shape
New shape
5%
60 50 40 40
Design 40 40 35 30
Total 4.5 3.75 3.5
Price
Total cost
15%
50 30 40 30
Instalment monthly cost 20 10 15 5
Maintenance Services 20 10 15 15
Total cost with installment 10 5 10 5
Total 8.25 12 8.25
Tank
Capacity
5%
20 20 20 15
Fuel Consumption 80 80 70 75
Total 5 4.5 4.5
Supplier
Quality
5%
30 30 30 20
Customer satisfaction 50 40 50 40
Distribution 20 20 20 10
Total 4.5 5 3.5
Final Total 100% 82.25 83 82.5

Table 3 – The value assignment to alternatives

As we have noticed, that you can put some values based on some facts and some research you have made or your own experiences and preferences. As you can see, that each criterion for the alternatives has a total value, which is the total of metrics scores * criteria weight

Analyze the results and take the decision

After the completion of the trade-off matrix, you can go back and start again the modification of anything, like the criteria itself, the metrics, the assigned weight.

You can also ask your colleagues to put their scores and calculate the mean value of the total scores so you can achieve a better decision.

Screen Shot 2017-09-21 at 3.33.08 AM

Figure 2 – The final output chart

Finally, the maximum score should be your choice. While what if you have very close scores like our example here. You may need to go back and do some more analysis and research, did you cover all criteria, did you assign the correct weights. If everything is correct and complete, then any choice should be good for you.

Note: All scores are just for example illustrations and all of them are not related to any real case.

Here is the link for the trade-off matrix so you can better have clear insights about the calculations and use the template for other trade-off analysis.

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