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1. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 1
MGT610
Lecture 8
Stakeholder Perspective:
Prioritizing Needs
2. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 2
Project Value Network
Shareholder
Value
Outcome
Value
Stakeholder
Value
Effort
Value
AHP
3. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 3
Topics and Objectives
• Strategic Thinking: Focusing on what creates
most value for the stakeholders
• Prioritize Customer Needs with AHP
• Deploy Prioritized Customer Needs
• Analyze [only] important relationships in detail
4. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 4
Session Agenda
Stakeholder Perspective:
Identifying Needs for Requirement Definition
1. Perceptions of value lead to expectations
2. Compatibility of expectations as segmentation basis
3. Stable needs but dynamic expectations
4. Describing expectation as a tolerance
5. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 5
3. Project Blitz QFD: The 7 Steps of Blitz QFD
0. Identify the Customers (Previous lecture)
1. Go to Gemba (Previous lecture)
2. Discover Customer Needs (Previous lecture)
3. Structure Customer Needs (Previous lecture)
4. Analyze Customer Needs Structure (Previous lecture)
5. Prioritize Customer Needs (AHP)
6. Deploy Prioritized Customer Needs (MVT)
7. Analyze Essential Tasks in Detail (WBS, FMEA)
6. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 6
Project Blitz QFD: Step 5-7
Analytic
Hierarchy
Process
What needs are
most important?
Hierarchy
diagram Maximum Value
table
How to meet
their needs?
items
tasks
needsneeds
high-value
customer
needs
7MP
tools
high-value
tasks
tasks
Project Task
table
How will we
do it?
FMEA
table
risks
What could
go wrong?
What needs
weren't stated?
high-risk
items
high-value itemspriorities
a
b
c
?
[House of
Quality]
What details
should we know?
7. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 7
AHP: Priorities - Filtering / Selecting / Sorting
Should we focus on all identified customer needs?
We need a method for
– deciding which customer needs to focus on
by using a set of decision criteria
– deciding which to do now (priorities), and
which to do later (posteriorities)
But what are we looking for in a “priority”?
8. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 8
AHP: Different Types of Measurement Scales
scale
empirical
observations example
mathematical
structure
nominal determination of
equality
numbers on
football players
mayinterchange
values
ordinal determination of
rank order
team standings maysquare or
cube values
interval equalityofintervals
or differences
temperature in ° F
or ° C
mayadd a
constantto values
ratio equalityofratios temperature in
° Kelvin
maymultiplyvalues
bya constant
source: S.S. Stevens, Science 103:678
For accurate selection, and for weights you can
multiply by, you must have ratio scale priorities
9. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 9
AHP: Direction to a Solution
What is the simplest way to get ratio scale
priorities?
Even though we don’t have ratio scale
judgments?
inputs AHP outputs
ratio
scale
results
judgments
10. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 10
AHP: The Analytical Hierarchy Process
Developed by Dr. Thomas L. Saaty
– well-tested, with excellent track record
• does not require consensus from participants
– works with quantitative and qualitative data
• produces ratio scale results in all cases
– psychologically “user friendly”
• uses relative judgment (pairwise evaluation)
– forces a detailed understanding of issues
• leads to a common understanding of the decision, and the
rationale for it
11. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 11
AHP: Inputs
How do we get our inputs?
– Pairwise evaluation
“Which one is more?
– Using a relative
judgment scale
“How much more?”
A pairwise evaluation on a
single dimension is the most
accurate judgment you make
Scale
– 9 extreme
– 8
– 7 very strong
– 6
– 5 strong
– 4
– 3 moderate
– 2
– 1 equal
12. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 12
AHP: Basic Template
13. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 13
AHP: Example: Apples with Oranges
Comparing apples and oranges, and other fruit, on
one characteristic: juiciness
– Additional characteristics can be handled the
same way…
14. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 14
AHP: Example: Apples with Oranges - Step1
For a single criteria (at a time)
Compare each pair
1 2 3 4
juiciness rmelon orange pear apple
1 watermelon 1
2 orange 1
3 pear 1
4 apple 1
15. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 15
AHP: Example: Apples with Oranges – Step1
After our first step the matrix looks like the following,
but with different numbers.
1 2 3 4
juiciness rmelon orange pear apple
watermelon 1 2 4 6
orange 1 2 4
pear 1 2
apple 1
16. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 16
AHP: Example: Apples with Oranges – Step2
The second step completes the matrix.
After the second step the matrix looks like the
following, just with different numbers.
1 2 3 4
juiciness rmelon orange pear apple
1 watermelon 1 2 4 6
2 orange 1/2 1 2 4
3 pear 1/4 1/2 1 2
4 apple 1/6 1/4 1/2 1
17. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 17
AHP: Example: Apples with Oranges – Step3
1 2 3 4
juiciness rmelon orange pear apple
1 watermelon 1 2 4 6
2 orange 1/2 1 2 4
3 pear 1/4 1/2 1 2
4 apple 1/6 1/4 1/2 1
1.92 3.75 7.50 13.0
18. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 18
AHP: Example: Apples with Oranges – Step4
1 2 3 4 1 2 3 4 row row
juiciness rmelon orange pear apple normalized columns total avg.
1 watermelon 1 2.0 4 6 0.52 0.53 0.53 0.46
2 orange 1/2 1 2 4 0.26 0.27 0.27 0.31
3 pear 1/4 1/2 1 2 0.13 0.13 0.13 0.15
4 apple 1/6 1/4 1/2 1 0.09 0.07 0.07 0.08
1.92 3.75 7.50 13.00 1.00 1.00 1.00 1.00 4.00 1.000
relative judgment scale:
extreme 9.0 1/9 0.111
8.0 1/8 0.125
very strong 7.0 1/7 0.143
6.0 1/6 0.167
strong 5.0 1/5 0.200
4.0 1/4 0.250
moderate 3.0 1/3 0.333
2.0 1/2 0.500
equal 1.0 1/1 1.000
the
Row
Average of
Normalized
Columns
approximation
19. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 19
AHP: Example: Apples with Oranges – Step5 and
6
1 2 3 4 1 2 3 4 row row
juiciness rmelon orange pear apple normalized columns total avg.
1 watermelon 1 2.0 4 6 0.52 0.53 0.53 0.46 2.049 0.512
2 orange 1/2 1 2 4 0.26 0.27 0.27 0.31 1.101 0.275
3 pear 1/4 1/2 1 2 0.13 0.13 0.13 0.15 0.551 0.138
4 apple 1/6 1/4 1/2 1 0.09 0.07 0.07 0.08 0.299 0.075
1.92 3.75 7.50 13.00 1.00 1.00 1.00 1.00 4.00 1.000
relative judgment scale:
extreme 9.0 1/9 0.111
8.0 1/8 0.125
very strong 7.0 1/7 0.143
6.0 1/6 0.167
strong 5.0 1/5 0.200
4.0 1/4 0.250
moderate 3.0 1/3 0.333
2.0 1/2 0.500
equal 1.0 1/1 1.000
the
Row
Average of
Normalized
Columns
approximation
20. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 20
AHP: Example: Apples with Oranges – Output
• The results:
– accurate
– ratio-scale
– Priorities
– This can be proven
mathematically to be a
ratio scale
ratio-scale
juiciness priorities
1 watermelon 0.512
2 orange 0.275
3 pear 0.138
4 apple 0.075
1.000
What are your fruit ratios?
21. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 21
AHP: Example: Apples with Oranges – Checking
•How do we know it’s right?
– Sensitivity analysis
• visible process
• “what-if” scenarios
– Judgment consistency
• the inconsistency ratio
(.10 < IR)
• revisit the most
inconsistent judgments
Expert
Choice
ratio-scale exact
priorities calc.
0.512 0.542
0.275 0.303
0.138 0.110
0.075 0.045
1.000 1.000
IR=
0.06
22. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 22
AHP: Types of Evaluation Criteria
1. Relative judgments (Nominal Scale)
– the most generally applicable
– the most accurate judgment
2. Absolute judgments (Ordinal Scale)
– ranking against a standard scale
– requires experience and expertise
3. Quantitative judgments (Interval Scale)
Measurements or Estimates (numeric quantities)
– bigger is better
– smaller is better
23. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 23
AHP: Case 1: Selecting Projects
Many projects, and a few criteria
– Define the evaluation criteria
• And the values they may take on
– Prioritize the values
– For each criteria, assign values
• And plug in the priority of that value
– Add the priorities, normalize, and rank
24. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 24
AHP: Case 1: Rating projects
Criteria
Risk Reward
Uncertainty
Complexity
Pace
Success
Projects S % rank
Project 1
Project 2
Project 3
Project 4
25. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 25
AHP: Case 1: Criteria Uncertainty
Technological Uncertainty
Uncertainty
low
medium
high
super-high
normalized columns S %
low 1 2 3 5 0.49 0.46 0.55 0.45 1.95 0.49
medium 1/2 1 1 3 0.25 0.23 0.18 0.27 0.93 0.23
high 1/3 1/1 1 2 0.16 0.23 0.18 0.18 0.76 0.19
super-high 1/5 1/3 1/2 1 0.10 0.08 0.09 0.09 0.36 0.09
2.03 4.33 5.50 11.00 1.00 1.00 1.00 1.00 4.00 1.00
Take each criteria,
Define the values it can take on
Prioritize those values, with pairwise evaluation
26. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 26
AHP: Case 1: Criteria Complexity
System Complexity (scope)
Complexity
assembly
system
array
normalized columns S %
assembly 1 4 6 0.71 0.75 0.60 2.06 0.69
system 1/4 1 3 0.18 0.19 0.30 0.66 0.22
array 1/6 1/3 1 0.12 0.06 0.10 0.28 0.09
1.42 5.33 10.00 1.00 1.00 1.00 3.00 1.00
Continue for each criteria, and all values
27. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 27
AHP: Case 1: Criteria Pace
And additional criteria would be handled the
same way…
Time frame available for completion
Pace
regular
fast
blitz
normalized columns S %
regular 1 2 4 0.57 0.60 0.50 1.67 0.56
fast 1/2 1 3 0.29 0.30 0.38 0.96 0.32
blitz 1/4 1/3 1 0.14 0.10 0.13 0.37 0.12
1.75 3.33 8.00 1.00 1.00 1.00 3.00 1.00
28. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 28
AHP: Case 1: Criteria Success
Primary success dimension impact (expected)
Success
efficiency
customer
business
future
normalized columns S %
efficiency 1 3 5 7 0.60 0.58 0.68 0.44 2.29 0.57
customer 1/3 1 1 5 0.20 0.19 0.14 0.31 0.84 0.21
business 1/5 1/1 1 3 0.12 0.19 0.14 0.19 0.64 0.16
future 1/7 1/5 1/3 1 0.09 0.04 0.05 0.06 0.23 0.06
1.68 5.20 7.33 16.00 1.00 1.00 1.00 1.00 4.00 1.00
After the “risk” or “cost” criteria,
Here is a “reward” or “benefit” criteria…
Now fill the the appropriate values in the table
29. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 29
AHP: Case 1: Rating projects
Criteria
Risk Reward
Uncertainty
Complexity
Pace
Success
Projects S % rank
medium system blitz customer
Project 1
low array fast business
Project 2
super assembly regular future
Project 3
high system blitz efficiency
Project 4
0.00
30. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 30
AHP: Case 1: Project Priorities
Criteria
Risk Reward
Uncertainty
Complexity
Pace
Success
Projects S % rank
medium system blitz customer
Project 1 0.23 0.22 0.12 0.21 0.79 0.18 4
low array fast business
Project 2 0.49 0.09 0.32 0.16 1.06 0.24 3
super assembly regular future
Project 3 0.09 0.69 0.56 0.06 1.39 0.32 1
high system blitz efficiency
Project 4 0.19 0.22 0.12 0.57 1.11 0.25 2
4.34 1.00
31. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 31
AHP: Case 1: Many ways to apply …
Criteria
Risk Reward
Uncertainty
Complexity
Pace
Success
Projects S % rank S % rank
medium system blitz customer
Project 1 0.23 0.22 0.12 0.58 0.17 3 0.21 0.21 0.21 2
low array fast business
Project 2 0.49 0.09 0.32 0.90 0.27 2 0.16 0.16 0.16 3
super assembly regular future
Project 3 0.09 0.69 0.56 1.33 0.40 1 0.06 0.06 0.06 4
high system blitz efficiency
Project 4 0.19 0.22 0.12 0.53 0.16 4 0.57 0.57 0.57 1
3.34 1.00 1.00 1.00
Risk Reward
May separate risk and reward… and add more
criteria
32. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 32
Case 2: Prioritizing in a Hierarchy
• Many criteria, and few alternatives
– Define the criteria
• Organize into a hierarchy
– Prioritize the criteria hierarchy top-down
• By what method?
– Apply the most important criteria first
• No need to continue once an alternative
dominates the rest
– Check the analysis for sensitivity
33. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 33
Case 2: Prioritizing in a Hierarchy
alternatives
businessasusual
shutofftheiroxygen
embraceandextend
radicalreengineering
criteria % wt.
SA1
SA2
SA3
SA4
revenue
cost
risk
fun
%
¶
·
¸
¹Î
What project strategy
is to prefer?
What are the criteria?
Here we have an
example of each type
of criteria
(mathematically)
34. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 34
Case 2: Step 1 Prioritizing the Decision Criteria
Are the decision criteria equal in importance? No!
So prioritize the criteria… by the same method:
Pair wise Evaluation
(importance of criteria to strategy selection) row row
criteria revenu cost risk fun normalized columns total avg.
revenue 1 3 5 7 0.597 0.662 0.536 0.438 2.232 0.558
cost 1/3 1 3 5 0.199 0.221 0.321 0.313 1.053 0.263
risk 1/5 1/3 1 3 0.119 0.074 0.107 0.188 0.487 0.122
fun 1/7 1/5 1/3 1 0.085 0.044 0.036 0.063 0.228 0.057
1.676 4.533 9.333 16.000 1 1 1 1 4 1
Î
35. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 35
Case 2: Step 2 Prioritizing the Alternatives
revenue (projected revenue for alternative) totals
estimated value 100 60 120 80 360
normalized 0.278 0.167 0.333 0.222 1.000
¶
cost (relative cost of alternative) totals
estimated value $100 $120 $110 $140 470
the inverse 0.010 0.008 0.009 0.007 0.035
normalized 0.289 0.241 0.263 0.207 1.000
·
Bigger is Better!
Smaller is Better! => Inverse!
36. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 36
Case 2: Step 2 Prioritizing the Alternatives
risk (the degreeof strategic risk)
absolute judgment 2 5 3 4 no. of arrows
weight 0.260 0.035 0.134 0.068 0.4969
normalized 0.523 0.070 0.270 0.136 1.000
¸
risk (the degree of risk for alternative) row row
absolute judgment scale: safe some risk bold fool normalized columns total avg.
ô 1 safe 1 3 5 7 9 0.560 0.642 0.524 0.429 0.360 2.514 0.503
ôô 2 some risk 1/3 1 3 5 7 0.187 0.214 0.315 0.306 0.280 1.301 0.260
ôôô 3 risky 1/5 1/3 1 3 5 0.112 0.071 0.105 0.184 0.200 0.672 0.134
ôôôô 4 bold 1/7 1/5 1/3 1 3 0.080 0.043 0.035 0.061 0.120 0.339 0.068
ôôôôô 5 foolhardy 1/9 1/7 1/5 1/3 1 0.062 0.031 0.021 0.020 0.040 0.174 0.035
1.79 4.68 9.53 16.33 25.00 1.000 1.000 1.000 1.000 1.000 5.000 1.000
The absolute judgment requires expertise
37. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 37
Case 2: Step 2 Prioritizing the Alternatives
(amount of enjoyment in doing alternative) row row
fun busine shut o embrac radica normalized columns total avg.
business as usual 1 1/3 1/5 5 0.109 0.074 0.122 0.227 0.532 0.133
shut off their oxygen 3/1 1 1/3 7 0.326 0.223 0.203 0.318 1.070 0.268
embrace and extend 5/1 3/1 1 9 0.543 0.670 0.608 0.409 2.231 0.558
radical reengineering 1/5 1/7 1/9 1 0.022 0.032 0.068 0.045 0.167 0.042
9.200 4.476 1.644 22.000 1 1 1 1 4 1
¹
38. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 38
Case 2: Step 3 Final Alternatives Evaluated
businessasusual
shutofftheiroxygen
embraceandextend
radicalreengineering
criteria % wt
SA1
SA2
SA3
SA4
100 60 120 80
0.278 0.167 0.333 0.222
revenue 0.558 0.155 0.093 0.186 0.124
cost
risk
fun
% priorities
count or estimate
local priorities
global priorities
39. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 39
Case 2: Step 3 Final Alternatives Evaluated
businessasusual
shutofftheiroxygen
embraceandextend
radicalreengineering
criteria % wt
SA1
SA2
SA3
SA4
100 60 120 80
0.278 0.167 0.333 0.222
revenue 0.558 0.155 0.093 0.186 0.124
100 120 110 140
0.289 0.241 0.263 0.207
cost 0.263 0.076 0.063 0.069 0.054
2 5 3 4
0.523 0.07 0.27 0.136
risk 0.122 0.064 0.009 0.033 0.017
0.133 0.268 0.558 0.042
fun 0.057 0.008 0.015 0.032 0.002
% 0.303 0.18 0.32 0.197 priorities
count or estimate
local priorities
global priorities
40. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 40
AHP: More criteria?
important
criteria
applied first
hierarchyof
criteria
alternatives
priorities
priorities
For a large number of
criteria…
We must organize the
Criteria
• Pairwise evaluation
would be too time
consuming…
41. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 41
AHP: Complex criteria REQUIRE A HIERARCHY
primary secondary tertiary
Secondary 1.1
1.2.1
1.2.2
Secondary 1.2 1.2.3
1.2.4
PRIMARY 2 Secondary 2.1 1.2.4
2.1.1
2.1.2
2.1.3
Secondary 2.2
– Several goals?
– Several
objectives for
each goal?
– Several sub-
objectives for
each objective?
•Three levels is all you
need…
42. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 42
AHP: Work top down
• First, compare
the primaries
• Then, compare
the secondaries
for the most
important
primary…
primary secondary tertiary
Secondary 1.1
local global
0.09 0.04 1.2.1
1.2.2
Secondary 1.2 1.2.3
local global 1.2.4
0.54 0.27
PRIMARY 2 Secondary 2.1 1.2.4
0.50 local global 2.1.1
0.32 0.16 2.1.2
2.1.3
Secondary 2.2
local global
0.06 0.03
1.00 0.50
43. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 43
AHP: Branch by branch
primary secondary tertiary local global
Secondary 1.1
local global
0.09 0.04 1.2.1 0.47 0.13
1.2.2 0.32 0.09
Secondary 1.2 1.2.3 0.17 0.05
local global 1.2.4 0.04 0.01
0.54 0.27 1.00
PRIMARY 2 Secondary 2.1 1.2.4
0.50 local global 2.1.1
0.32 0.16 2.1.2
2.1.3
Secondary 2.2
local global
0.06 0.03
1.00 0.50
Then compare the tertiaries for the most
important secondary…
44. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 44
AHP: Most important criteria
primary secondary tertiary local global rank ?
Secondary 1.1 0.04 5
local global
0.09 0.04 1.2.1 0.47 0.13 1
1.2.2 0.32 0.09 3
Secondary 1.2 1.2.3 0.17 0.05 4
local global 1.2.4 0.04 0.01 9
0.54 0.27 1.00
PRIMARY 2 Secondary 2.1 1.2.4 0.64 0.10 2
0.50 local global 2.1.1 0.21 0.03 6
0.32 0.16 2.1.2 0.10 0.02 8
2.1.3 0.05 0.01 10
Secondary 2.2 1.00
local global
0.06 0.03 0.03 7
1.00 0.50 0.50
45. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 45
AHP: Results
•We can identify and prioritize the most important criteria
first
– Before all the criteria are prioritized,
or even identified
– Efficient prioritization!
•Apply those most important criteria to the alternatives
– And stop if one alternative is dominant
– Efficient selection!
46. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 46
AHP: Focusing on Few Criteria
• Exhaustive evaluation is unnecessary
Requirements Priority
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
Requirements
Priority
High value
Requirements
BEST EFFORTS
Low value
Requirements
USUAL EFFORTS
47. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 47
AHP: Don’t make this mistake
– Criteria not at same
level of detail?
– Priorities on ordinal
or interval scale?
– All criteria applied,
inconsistently, with
an ordinal scale?
• Ordinal x
ordinal = “error:
invalid
operation”
– Add table entries
– Result = garbage
all criteria
applied
alternatives
ordinalpriorities
big list
of
criteria
garbage
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AHP: Summary
• The Analytic Hierarchy Process (AHP)
– How are priority/selection decisions made in
your organization?
– Is the process well-defined and visible?
• is it checked? improved? taught?
– Is it done efficiently?
• Is the math legitimate?
• Is it important, and useful, to be good at rapid,
accurate priorities?
49. Mgt 610 Strategic Perspectives on Project Management
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AHP: Software
• There are several packages available to do the
calculations (including Excel).
– Expert Choice 2000 (www.expertchoice.com)
• Trial version available for free download
• Limited to three levels (you don’t need more for
most analyses)
• Excellent inconsistency and sensitivity analysis
• Good manual and tutorial in full version
• Many decision analysis tools include AHP
50. Mgt 610 Strategic Perspectives on Project Management
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Step 6: Deploy Prioritized Customer Needs
• Now that you know the most important customer needs, you
know:
– What you must do to deliver them?
– How to find the most important contributors
in the other columns on the CVT
• or add them...
• Define the Maximum Value Table
51. Mgt 610 Strategic Perspectives on Project Management
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Step 6: Maximum Value Table
customer voice table customer voice table customer voice table
c us t om er c onc er ns t ec hnic al c onc er ns des ign c onc er ns
customer customer customer technical
segments problems needs requirements functions technology reliability safety
home owner "slips out of my can hold easily dimensions illuminate objectspower saving works in cold no sparks
hand and breaks" switch weather (gas leak)
driver "always dead charges quickly weight protect adjustable focus switch doesn't bright color,
when I need it" components stick glow-in-the-dark
camper "don't bring can carry easily stability transform energyadjustable lens doesn't crackstill works
when I need it" headband when dropped when dropped
On the MVT,
those items that contribute most to satisfying the most
important customer needs, are the maximum value items
52. Mgt 610 Strategic Perspectives on Project Management
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Step 7. Analyze Essential Tasks in Detail
•Analyze Important Relationships in Detail and only to the extent
that is warranted!
– keep the focus on high-value items
– explore [only] to the depth necessary,
• the details of one column, or
• the interactions between two columns
•Redefine the WBS if necessary
•Modify the project risk analysis with FMEA
53. Mgt 610 Strategic Perspectives on Project Management
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Doing Project Blitz QFD
• Don’t stagnate!
– continually improve at QFD, and product development
• get better at the tools & techniques
• refine your process
• become more sophisticated, more comprehensive
– graduate from Blitz QFD, to Comprehensive QFD
54. Mgt 610 Strategic Perspectives on Project Management
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Doing Project Blitz QFD
• Any negative effects?
– Is there any downside to
doing Blitz QFD?
– Will anything else be
worse because you are
doing Blitz?
• Plan how to deal with
negative effects and
anticipated obstacles!
Any anticipated obstacles?
– If you can’t do Blitz QFD,
you can’t do QFD…
• easier, faster, cheaper
– Management may need a
professional overview of
QFD
• benefits
• who’s doing it
55. Mgt 610 Strategic Perspectives on Project Management
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Doing Project Blitz QFD
• Preparation (offline)
– one day: sort out our inputs; clarify what we have; what
we are doing; goals
• Workshop (with full team)
– one day: do Blitz
• Follow up (with selected team members)
– one day: how to fill in the holes we found
56. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 56
Doing Project Blitz QFD
• Blitz QFD:
– emphasizes on all the basic themes of QFD
– develops good QFD habits,
and avoids bad QFD habits
– demonstrates the power of QFD quickly
– fully upwards compatible with high-powered comprehensive
QFD
– encourages development to a more sophisticated QFD
process
57. Mgt 610 Strategic Perspectives on Project Management
(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 57
AHP Homework example: Where to go on
vacation?
• Alternatives?
– Bora Bora
– Orlando
– Paris
– New York
• Criteria?
– Relaxation
– Things to Do
– Cost
– Memories
• Take four alternatives, and apply four weighted
• criteria to them (as a minimum)
58. Mgt 610 Strategic Perspectives on Project Management
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AHP: Example
Vacation Destinations
BoraBora
Orlando
Paris
NewYork
Critieria priority
0.62 0.12 0.20 0.06 local priorities
Relaxation 0.16 0.10 0.02 0.03 0.01 global priorities
0.05 0.21 0.32 0.42 local priorities
Things to Do 0.09 0.00 0.02 0.03 0.04 global priorities
0.06 0.24 0.13 0.57 local priorities
Cost 0.34 0.02 0.08 0.04 0.20 global priorities
0.57 0.10 0.29 0.04 local priorities
Memories 0.41 0.23 0.04 0.12 0.02 global priorities
1.00 0.36 0.16 0.22 0.26 priority 1.000
1 4 3 2 rank
59. Mgt 610 Strategic Perspectives on Project Management
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AHP: Example
Criteria Weight
Relaxation
ThingstoDo
Cost
Memories
normalized columns S
priority
rank
Relaxation 1 3 1/2 1/5 0.120 0.273 0.182 0.079 0.653 0.163 3
Things to Do 1/3 1 1/4 1/3 0.040 0.091 0.091 0.132 0.353 0.088 4
Cost 2 4 1 1 0.240 0.364 0.364 0.395 1.362 0.341 2
Memories 5 3 1/1 1 0.600 0.273 0.364 0.395 1.631 0.408 1
8.333 11.000 2.750 2.533 1.000 1.000 1.000 1.000 4.000 1.000
Relaxation
BoraBora
Orlando
Paris
NewYork
normalized columns S
priority
rank
Bora Bora 1 6 4 8 0.649 0.643 0.696 0.500 2.487 0.622 1
Orlando 1/6 1 1/2 3 0.108 0.107 0.087 0.188 0.490 0.122 3
Paris 1/4 2 1 4 0.162 0.214 0.174 0.250 0.800 0.200 2
New York 1/8 1/3 1/4 1 0.081 0.036 0.043 0.063 0.223 0.056 4
1.542 9.333 5.750 16.000 1.000 1.000 1.000 1.000 4.000 1.000
60. Mgt 610 Strategic Perspectives on Project Management
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AHP: Example
Things to Do
BoraBora
Orlando
Paris
NewYork
totals
estimated number 10 40 60 80 190
normalized 0.053 0.211 0.316 0.421 1.000
4 3 2 1 rank
Cost
BoraBora
Orlando
Paris
NewYork
totals
estimated cost $5,000 $1,200 $2,200 $500 $8,900
the inverse 0.000 0.001 0.000 0.002 0.003
normalized 0.057 0.239 0.130 0.573 1.000
4 2 3 1 rank
61. Mgt 610 Strategic Perspectives on Project Management
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AHP: Example
Now go and construct your own AHP example
using Excel (or download Expert Choice 2000)
Memories
weeks
months
years
lifetime
normalized columns S
priority
values weeks 1 1/4 1/7 1/9 0.048 0.019 0.033 0.070 0.169 0.042
months 4 1 1/5 1/7 0.190 0.075 0.046 0.090 0.402 0.101
years 7 5 1 1/3 0.333 0.377 0.230 0.210 1.151 0.288
lifetime 9 7 3 1 0.429 0.528 0.691 0.630 2.278 0.569
21.000 13.250 4.343 1.587 1.000 1.000 1.000 1.000 4.000 1.000
values applied
BoraBora
Orlando
Paris
NewYork
value lifetime months years weeks
priority 0.569 0.101 0.288 0.042
1 3 2 4 rank