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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. 1MGT610Lecture 8Stakeholder 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. 2Project Value NetworkShareholderValueOutcomeValueStakeholderValueEffortValueAHP
  • 3. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 3Topics and Objectives• Strategic Thinking: Focusing on what createsmost 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. 4Session AgendaStakeholder Perspective:Identifying Needs for Requirement Definition1. Perceptions of value lead to expectations2. Compatibility of expectations as segmentation basis3. Stable needs but dynamic expectations4. 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. 53. Project Blitz QFD: The 7 Steps of Blitz QFD0. 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. 6Project Blitz QFD: Step 5-7AnalyticHierarchyProcessWhat needs aremost important? Hierarchydiagram Maximum ValuetableHow to meettheir needs?itemstasksneedsneedshigh-valuecustomerneeds7MPtoolshigh-valuetaskstasksProject TasktableHow will wedo it?FMEAtablerisksWhat couldgo wrong?What needswerent stated?high-riskitemshigh-value itemsprioritiesabc?[House ofQuality]What detailsshould we know?
  • 7. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 7AHP: Priorities - Filtering / Selecting / SortingShould we focus on all identified customer needs?We need a method for– deciding which customer needs to focus onby using a set of decision criteria– deciding which to do now (priorities), andwhich 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. 8AHP: Different Types of Measurement Scalesscaleempiricalobservations examplemathematicalstructurenominal determination ofequalitynumbers onfootball playersmayinterchangevaluesordinal determination ofrank orderteam standings maysquare orcube valuesinterval equalityofintervalsor differencestemperature in ° For ° Cmayadd aconstantto valuesratio equalityofratios temperature in° Kelvinmaymultiplyvaluesbya constantsource: S.S. Stevens, Science 103:678For accurate selection, and for weights you canmultiply 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. 9AHP: Direction to a SolutionWhat is the simplest way to get ratio scalepriorities?Even though we don’t have ratio scalejudgments?inputs AHP outputsratioscaleresultsjudgments
  • 10. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 10AHP: The Analytical Hierarchy ProcessDeveloped 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 therationale for it
  • 11. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 11AHP: InputsHow do we get our inputs?– Pairwise evaluation“Which one is more?– Using a relativejudgment scale“How much more?”A pairwise evaluation on asingle dimension is the mostaccurate judgment you makeScale– 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. 12AHP: Basic Template
  • 13. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 13AHP: Example: Apples with OrangesComparing apples and oranges, and other fruit, onone characteristic: juiciness– Additional characteristics can be handled thesame way…
  • 14. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 14AHP: Example: Apples with Oranges - Step1For a single criteria (at a time)Compare each pair1 2 3 4juiciness rmelon orange pear apple1 watermelon 12 orange 13 pear 14 apple 1
  • 15. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 15AHP: Example: Apples with Oranges – Step1After our first step the matrix looks like the following,but with different numbers.1 2 3 4juiciness rmelon orange pear applewatermelon 1 2 4 6orange 1 2 4pear 1 2apple 1
  • 16. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 16AHP: Example: Apples with Oranges – Step2The second step completes the matrix.After the second step the matrix looks like thefollowing, just with different numbers.1 2 3 4juiciness rmelon orange pear apple1 watermelon 1 2 4 62 orange 1/2 1 2 43 pear 1/4 1/2 1 24 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. 17AHP: Example: Apples with Oranges – Step31 2 3 4juiciness rmelon orange pear apple1 watermelon 1 2 4 62 orange 1/2 1 2 43 pear 1/4 1/2 1 24 apple 1/6 1/4 1/2 11.92 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. 18AHP: Example: Apples with Oranges – Step41 2 3 4 1 2 3 4 row rowjuiciness rmelon orange pear apple normalized columns total avg.1 watermelon 1 2.0 4 6 0.52 0.53 0.53 0.462 orange 1/2 1 2 4 0.26 0.27 0.27 0.313 pear 1/4 1/2 1 2 0.13 0.13 0.13 0.154 apple 1/6 1/4 1/2 1 0.09 0.07 0.07 0.081.92 3.75 7.50 13.00 1.00 1.00 1.00 1.00 4.00 1.000relative judgment scale:extreme 9.0 1/9 0.1118.0 1/8 0.125very strong 7.0 1/7 0.1436.0 1/6 0.167strong 5.0 1/5 0.2004.0 1/4 0.250moderate 3.0 1/3 0.3332.0 1/2 0.500equal 1.0 1/1 1.000theRowAverage ofNormalizedColumnsapproximation
  • 19. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 19AHP: Example: Apples with Oranges – Step5 and61 2 3 4 1 2 3 4 row rowjuiciness 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 0.5122 orange 1/2 1 2 4 0.26 0.27 0.27 0.31 1.101 0.2753 pear 1/4 1/2 1 2 0.13 0.13 0.13 0.15 0.551 0.1384 apple 1/6 1/4 1/2 1 0.09 0.07 0.07 0.08 0.299 0.0751.92 3.75 7.50 13.00 1.00 1.00 1.00 1.00 4.00 1.000relative judgment scale:extreme 9.0 1/9 0.1118.0 1/8 0.125very strong 7.0 1/7 0.1436.0 1/6 0.167strong 5.0 1/5 0.2004.0 1/4 0.250moderate 3.0 1/3 0.3332.0 1/2 0.500equal 1.0 1/1 1.000theRowAverage ofNormalizedColumnsapproximation
  • 20. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 20AHP: Example: Apples with Oranges – Output• The results:– accurate– ratio-scale– Priorities– This can be provenmathematically to be aratio scaleratio-scalejuiciness priorities1 watermelon 0.5122 orange 0.2753 pear 0.1384 apple 0.0751.000What 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. 21AHP: 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 mostinconsistent judgmentsExpertChoiceratio-scale exactpriorities calc.0.512 0.5420.275 0.3030.138 0.1100.075 0.0451.000 1.000IR=0.06
  • 22. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 22AHP: Types of Evaluation Criteria1. Relative judgments (Nominal Scale)– the most generally applicable– the most accurate judgment2. Absolute judgments (Ordinal Scale)– ranking against a standard scale– requires experience and expertise3. 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. 23AHP: Case 1: Selecting ProjectsMany 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. 24AHP: Case 1: Rating projectsCriteriaRisk RewardUncertaintyComplexityPaceSuccessProjects S % rankProject 1Project 2Project 3Project 4
  • 25. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 25AHP: Case 1: Criteria UncertaintyTechnological UncertaintyUncertaintylowmediumhighsuper-highnormalized columns S %low 1 2 3 5 0.49 0.46 0.55 0.45 1.95 0.49medium 1/2 1 1 3 0.25 0.23 0.18 0.27 0.93 0.23high 1/3 1/1 1 2 0.16 0.23 0.18 0.18 0.76 0.19super-high 1/5 1/3 1/2 1 0.10 0.08 0.09 0.09 0.36 0.092.03 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. 26AHP: Case 1: Criteria ComplexitySystem Complexity (scope)Complexityassemblysystemarraynormalized columns S %assembly 1 4 6 0.71 0.75 0.60 2.06 0.69system 1/4 1 3 0.18 0.19 0.30 0.66 0.22array 1/6 1/3 1 0.12 0.06 0.10 0.28 0.091.42 5.33 10.00 1.00 1.00 1.00 3.00 1.00Continue 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. 27AHP: Case 1: Criteria PaceAnd additional criteria would be handled thesame way…Time frame available for completionPaceregularfastblitznormalized columns S %regular 1 2 4 0.57 0.60 0.50 1.67 0.56fast 1/2 1 3 0.29 0.30 0.38 0.96 0.32blitz 1/4 1/3 1 0.14 0.10 0.13 0.37 0.121.75 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. 28AHP: Case 1: Criteria SuccessPrimary success dimension impact (expected)Successefficiencycustomerbusinessfuturenormalized columns S %efficiency 1 3 5 7 0.60 0.58 0.68 0.44 2.29 0.57customer 1/3 1 1 5 0.20 0.19 0.14 0.31 0.84 0.21business 1/5 1/1 1 3 0.12 0.19 0.14 0.19 0.64 0.16future 1/7 1/5 1/3 1 0.09 0.04 0.05 0.06 0.23 0.061.68 5.20 7.33 16.00 1.00 1.00 1.00 1.00 4.00 1.00After 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. 29AHP: Case 1: Rating projectsCriteriaRisk RewardUncertaintyComplexityPaceSuccessProjects S % rankmedium system blitz customerProject 1low array fast businessProject 2super assembly regular futureProject 3high system blitz efficiencyProject 40.00
  • 30. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 30AHP: Case 1: Project PrioritiesCriteriaRisk RewardUncertaintyComplexityPaceSuccessProjects S % rankmedium system blitz customerProject 1 0.23 0.22 0.12 0.21 0.79 0.18 4low array fast businessProject 2 0.49 0.09 0.32 0.16 1.06 0.24 3super assembly regular futureProject 3 0.09 0.69 0.56 0.06 1.39 0.32 1high system blitz efficiencyProject 4 0.19 0.22 0.12 0.57 1.11 0.25 24.34 1.00
  • 31. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 31AHP: Case 1: Many ways to apply …CriteriaRisk RewardUncertaintyComplexityPaceSuccessProjects S % rank S % rankmedium system blitz customerProject 1 0.23 0.22 0.12 0.58 0.17 3 0.21 0.21 0.21 2low array fast businessProject 2 0.49 0.09 0.32 0.90 0.27 2 0.16 0.16 0.16 3super assembly regular futureProject 3 0.09 0.69 0.56 1.33 0.40 1 0.06 0.06 0.06 4high system blitz efficiencyProject 4 0.19 0.22 0.12 0.53 0.16 4 0.57 0.57 0.57 13.34 1.00 1.00 1.00Risk RewardMay separate risk and reward… and add morecriteria
  • 32. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 32Case 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 alternativedominates 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. 33Case 2: Prioritizing in a Hierarchyalternativesbusinessasusualshutofftheiroxygenembraceandextendradicalreengineeringcriteria % wt.SA1SA2SA3SA4revenuecostriskfun%¶·¸¹ÎWhat project strategyis to prefer?What are the criteria?Here we have anexample of each typeof criteria(mathematically)
  • 34. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 34Case 2: Step 1 Prioritizing the Decision CriteriaAre 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 rowcriteria revenu cost risk fun normalized columns total avg.revenue 1 3 5 7 0.597 0.662 0.536 0.438 2.232 0.558cost 1/3 1 3 5 0.199 0.221 0.321 0.313 1.053 0.263risk 1/5 1/3 1 3 0.119 0.074 0.107 0.188 0.487 0.122fun 1/7 1/5 1/3 1 0.085 0.044 0.036 0.063 0.228 0.0571.676 4.533 9.333 16.000 1 1 1 1 4 1Î
  • 35. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 35Case 2: Step 2 Prioritizing the Alternativesrevenue (projected revenue for alternative) totalsestimated value 100 60 120 80 360normalized 0.278 0.167 0.333 0.222 1.000¶cost (relative cost of alternative) totalsestimated value $100 $120 $110 $140 470the inverse 0.010 0.008 0.009 0.007 0.035normalized 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. 36Case 2: Step 2 Prioritizing the Alternativesrisk (the degreeof strategic risk)absolute judgment 2 5 3 4 no. of arrowsweight 0.260 0.035 0.134 0.068 0.4969normalized 0.523 0.070 0.270 0.136 1.000¸risk (the degree of risk for alternative) row rowabsolute 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 0.503ôô 2 some risk 1/3 1 3 5 7 0.187 0.214 0.315 0.306 0.280 1.301 0.260ôôô 3 risky 1/5 1/3 1 3 5 0.112 0.071 0.105 0.184 0.200 0.672 0.134ôôôô 4 bold 1/7 1/5 1/3 1 3 0.080 0.043 0.035 0.061 0.120 0.339 0.068ôôôôô 5 foolhardy 1/9 1/7 1/5 1/3 1 0.062 0.031 0.021 0.020 0.040 0.174 0.0351.79 4.68 9.53 16.33 25.00 1.000 1.000 1.000 1.000 1.000 5.000 1.000The 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. 37Case 2: Step 2 Prioritizing the Alternatives(amount of enjoyment in doing alternative) row rowfun 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 0.133shut off their oxygen 3/1 1 1/3 7 0.326 0.223 0.203 0.318 1.070 0.268embrace and extend 5/1 3/1 1 9 0.543 0.670 0.608 0.409 2.231 0.558radical reengineering 1/5 1/7 1/9 1 0.022 0.032 0.068 0.045 0.167 0.0429.200 4.476 1.644 22.000 1 1 1 1 4 1¹
  • 38. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 38Case 2: Step 3 Final Alternatives Evaluatedbusinessasusualshutofftheiroxygenembraceandextendradicalreengineeringcriteria % wtSA1SA2SA3SA4100 60 120 800.278 0.167 0.333 0.222revenue 0.558 0.155 0.093 0.186 0.124costriskfun% prioritiescount or estimatelocal prioritiesglobal priorities
  • 39. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 39Case 2: Step 3 Final Alternatives Evaluatedbusinessasusualshutofftheiroxygenembraceandextendradicalreengineeringcriteria % wtSA1SA2SA3SA4100 60 120 800.278 0.167 0.333 0.222revenue 0.558 0.155 0.093 0.186 0.124100 120 110 1400.289 0.241 0.263 0.207cost 0.263 0.076 0.063 0.069 0.0542 5 3 40.523 0.07 0.27 0.136risk 0.122 0.064 0.009 0.033 0.0170.133 0.268 0.558 0.042fun 0.057 0.008 0.015 0.032 0.002% 0.303 0.18 0.32 0.197 prioritiescount or estimatelocal prioritiesglobal priorities
  • 40. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 40AHP: More criteria?importantcriteriaapplied firsthierarchyofcriteriaalternativesprioritiesprioritiesFor a large number ofcriteria…We must organize theCriteria• Pairwise evaluationwould be too timeconsuming…
  • 41. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 41AHP: Complex criteria REQUIRE A HIERARCHYprimary secondary tertiarySecondary 1.11.2.11.2.2Secondary 1.2 1.2.31.2.4PRIMARY 2 Secondary 2.1 1.2.42.1.12.1.22.1.3Secondary 2.2– Several goals?– Severalobjectives foreach goal?– Several sub-objectives foreach objective?•Three levels is all youneed…
  • 42. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 42AHP: Work top down• First, comparethe primaries• Then, comparethe secondariesfor the mostimportantprimary…primary secondary tertiarySecondary 1.1local global0.09 0.04 1.2.11.2.2Secondary 1.2 1.2.3local global 1.2.40.54 0.27PRIMARY 2 Secondary 2.1 1.2.40.50 local global 2.1.10.32 0.16 2.1.22.1.3Secondary 2.2local global0.06 0.031.00 0.50
  • 43. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 43AHP: Branch by branchprimary secondary tertiary local globalSecondary 1.1local global0.09 0.04 1.2.1 0.47 0.131.2.2 0.32 0.09Secondary 1.2 1.2.3 0.17 0.05local global 1.2.4 0.04 0.010.54 0.27 1.00PRIMARY 2 Secondary 2.1 1.2.40.50 local global 2.1.10.32 0.16 2.1.22.1.3Secondary 2.2local global0.06 0.031.00 0.50Then compare the tertiaries for the mostimportant secondary…
  • 44. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 44AHP: Most important criteriaprimary secondary tertiary local global rank ?Secondary 1.1 0.04 5local global0.09 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 90.54 0.27 1.00PRIMARY 2 Secondary 2.1 1.2.4 0.64 0.10 2 0.50 local global 2.1.1 0.21 0.03 60.32 0.16 2.1.2 0.10 0.02 82.1.3 0.05 0.01 10Secondary 2.2 1.00local global0.06 0.03 0.03 71.00 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. 45AHP: Results•We can identify and prioritize the most important criteriafirst– 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. 46AHP: Focusing on Few Criteria• Exhaustive evaluation is unnecessaryRequirements Priority0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16RequirementsPriorityHigh valueRequirementsBEST EFFORTSLow valueRequirementsUSUAL EFFORTS
  • 47. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 47AHP: Don’t make this mistake– Criteria not at samelevel of detail?– Priorities on ordinalor interval scale?– All criteria applied,inconsistently, withan ordinal scale?• Ordinal xordinal = “error:invalidoperation”– Add table entries– Result = garbageall criteriaappliedalternativesordinalprioritiesbig listofcriteriagarbage
  • 48. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 48AHP: Summary• The Analytic Hierarchy Process (AHP)– How are priority/selection decisions made inyour 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(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 49AHP: Software• There are several packages available to do thecalculations (including Excel).– Expert Choice 2000 (www.expertchoice.com)• Trial version available for free download• Limited to three levels (you don’t need more formost 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(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 50Step 6: Deploy Prioritized Customer Needs• Now that you know the most important customer needs, youknow:– What you must do to deliver them?– How to find the most important contributorsin the other columns on the CVT• or add them...• Define the Maximum Value Table
  • 51. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 51Step 6: Maximum Value Tablecustomer voice table customer voice table customer voice tablec us t om er c onc er ns t ec hnic al c onc er ns des ign c onc er nscustomer customer customer technicalsegments problems needs requirements functions technology reliability safetyhome owner "slips out of my can hold easily dimensions illuminate objectspower saving works in cold no sparkshand and breaks" switch weather (gas leak)driver "always dead charges quickly weight protect adjustable focus switch doesnt bright color,when I need it" components stick glow-in-the-darkcamper "dont bring can carry easily stability transform energyadjustable lens doesnt crackstill workswhen I need it" headband when dropped when droppedOn the MVT,those items that contribute most to satisfying the mostimportant customer needs, are the maximum value items
  • 52. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 52Step 7. Analyze Essential Tasks in Detail•Analyze Important Relationships in Detail and only to the extentthat 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(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 53Doing 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(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 54Doing Project Blitz QFD• Any negative effects?– Is there any downside todoing Blitz QFD?– Will anything else beworse because you aredoing Blitz?• Plan how to deal withnegative effects andanticipated obstacles!Any anticipated obstacles?– If you can’t do Blitz QFD,you can’t do QFD…• easier, faster, cheaper– Management may need aprofessional overview ofQFD• benefits• who’s doing it
  • 55. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 55Doing Project Blitz QFD• Preparation (offline)– one day: sort out our inputs; clarify what we have; whatwe 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. 56Doing 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 comprehensiveQFD– encourages development to a more sophisticated QFDprocess
  • 57. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 57AHP Homework example: Where to go onvacation?• 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(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 58AHP: ExampleVacation DestinationsBoraBoraOrlandoParisNewYorkCritieria priority0.62 0.12 0.20 0.06 local prioritiesRelaxation 0.16 0.10 0.02 0.03 0.01 global priorities0.05 0.21 0.32 0.42 local prioritiesThings to Do 0.09 0.00 0.02 0.03 0.04 global priorities0.06 0.24 0.13 0.57 local prioritiesCost 0.34 0.02 0.08 0.04 0.20 global priorities0.57 0.10 0.29 0.04 local prioritiesMemories 0.41 0.23 0.04 0.12 0.02 global priorities1.00 0.36 0.16 0.22 0.26 priority 1.0001 4 3 2 rank
  • 59. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 59AHP: ExampleCriteria WeightRelaxationThingstoDoCostMemoriesnormalized columns SpriorityrankRelaxation 1 3 1/2 1/5 0.120 0.273 0.182 0.079 0.653 0.163 3Things to Do 1/3 1 1/4 1/3 0.040 0.091 0.091 0.132 0.353 0.088 4Cost 2 4 1 1 0.240 0.364 0.364 0.395 1.362 0.341 2Memories 5 3 1/1 1 0.600 0.273 0.364 0.395 1.631 0.408 18.333 11.000 2.750 2.533 1.000 1.000 1.000 1.000 4.000 1.000RelaxationBoraBoraOrlandoParisNewYorknormalized columns SpriorityrankBora Bora 1 6 4 8 0.649 0.643 0.696 0.500 2.487 0.622 1Orlando 1/6 1 1/2 3 0.108 0.107 0.087 0.188 0.490 0.122 3Paris 1/4 2 1 4 0.162 0.214 0.174 0.250 0.800 0.200 2New York 1/8 1/3 1/4 1 0.081 0.036 0.043 0.063 0.223 0.056 41.542 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(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 60AHP: ExampleThings to DoBoraBoraOrlandoParisNewYorktotalsestimated number 10 40 60 80 190normalized 0.053 0.211 0.316 0.421 1.0004 3 2 1 rankCostBoraBoraOrlandoParisNewYorktotalsestimated cost $5,000 $1,200 $2,200 $500 $8,900the inverse 0.000 0.001 0.000 0.002 0.003normalized 0.057 0.239 0.130 0.573 1.0004 2 3 1 rank
  • 61. Mgt 610 Strategic Perspectives on Project Management(c) 2013, Thomas Lechler and David Keeney. All rights reserved.For academic use only. 61AHP: ExampleNow go and construct your own AHP exampleusing Excel (or download Expert Choice 2000)Memoriesweeksmonthsyearslifetimenormalized columns Spriorityvalues weeks 1 1/4 1/7 1/9 0.048 0.019 0.033 0.070 0.169 0.042months 4 1 1/5 1/7 0.190 0.075 0.046 0.090 0.402 0.101years 7 5 1 1/3 0.333 0.377 0.230 0.210 1.151 0.288lifetime 9 7 3 1 0.429 0.528 0.691 0.630 2.278 0.56921.000 13.250 4.343 1.587 1.000 1.000 1.000 1.000 4.000 1.000values appliedBoraBoraOrlandoParisNewYorkvalue lifetime months years weekspriority 0.569 0.101 0.288 0.0421 3 2 4 rank