CDP Demo

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CDP Demo using Procurement Model Example
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The Program Development Team met to
Discuss Procurement of Communications
Subsystem
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After Initial Discussions, a Team Member
Suggested use of Decision Analysis Tools

• Tools could help on complex procurement by
• Identifying important evaluation criteria
• Structuring the problem
• Building consensus (including management)
• Documenting process
• Communicating to all the results of the
  competition

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Where do we begin..?
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Like Most Complex Problems, Brainstorming is the
Initial Step in the Decision Process!
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So Let's Use CDP's Brainstorm Function!
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When CDP is Opened, the Brainstorm Screen
Appears
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Brainstorm - The Procurement Problem

• The goal is to procure a communications
  subsystem.
• Prior to issuing the Request for Proposal (RFP),
  all interested disciplines (engineering, finance,
  materiel, manufacturing, and management) are
  invited to attend a brainstorming session to
  identify the important factors in the procurement
  and to identify the evaluation criteria.
• CDPs Brainstormer is designed to support this
  activity.

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Brainstorming the Problem

• The participants voice their opinions on
  important factors which influence the procurement
  of the communications subsystem.
• The factors or criteria are typed in the
  brainstorm screen and connected in logical
  groups.
• Alternatives are identified (in this case they
  are the companies making bids).
• Lets see the Brainstorming screen which captured
  this session for the team...

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Things to Note on Screen

• Procure comm system is the problem identified
  in the oval in the center of the screen
• The different level factors (criteria) are
  connected to this goal and/or each other.
• The screen is a virtual screen which can be
  scrolled.
• Levels in the groupings are identified by colors
  (first level is red, etc).
• Alternatives are on right (these can be minimized
  to get more brainstorming screen).
• Just double-click anywhere and add an item.
• Clicking and dragging moves groups or individual
  items.

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Brainstorming Session

• The team identified the important criteria in the
  procurement.
• Lower levels of the tree or groups reflect the
  evaluation criteria.
• The session(s) are documented by saving the
  Brainstorming file.
• A decision hierarchy is easily generated when the
  group completes the session!

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Lets See What Hierarchy We Generated
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CDP Hierarchy
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The Hierarchy

• CDP has created a decision hierarchy from the
  Brainstorming session.
• The hierarchy is a tree with the decision goal
  on the left and the criteria and subcriteria to
  the left and the alternatives (companies) at the
  far right.
• Editing is easy, i.e. adding, deleting criteria
  or alternatives.

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Hierarchy

• The hierarchy is a decision model with the more
  general criteria to the left and the more
  specific criteria to the right.
• This reflects our understanding of the problem.
• The criteria connected to the alternatives will
  contain the hard data received from the bidders.

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Model Techniques

• CDP allows the user to select from two model
  techniques-
• Analytical Hierarchy Process (AHP), or
• Simple Multiple Attribute Rating Technique
  (SMART)
• When using probability distributions for
  uncertainty, we suggest using the SMART
  technique. The pull down menu shows our
  selection...

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Hierarchy - More...

• Each criterion in the model is important and must
  be assigned weights relative to the other
  criteria in that level reflecting our sense of
  its importance to the decision.
• CDP provides us the flexibility in how we assign
  these weights.
• Lets look at the weights assigned by the
  procurement team to the Main Criteria level...

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Main Criteria Level Weights

• Double-click the Goal Accept Bid to bring up
  the SMART rating screen.
• Decision maker(s) have the option of selecting a
  numeric, verbal, or graphical scale for the
  weights.
• The sample procurement model uses the Direct
  method with numeric scales - graphical form of
  the weights are also used
• Lets look at the SMART rating screen...

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Weights - More...

• CDP allows you to select from a set of default
  scales or to create custom scales for your
  criteria.
• In this model, the default scale of 0 to 100 is
  used for the Main Criteria level.
• Numerical values between 0 and 100 were assigned
  to each criterion representing the groups
  consensus on relative importance...

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Assigning Weights

• The procurement team decided cost was most
  important and gave it a weight of 90.
• Other criteria weights are as shown.
• Weights were assigned to the other lower level
  criteria in the same manner.
• It should be noted that each discipline
  (engineering, finance, etc.) could have their own
  more complex model to work on which could then be
  linked into the master model.

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Attribute Scores/Ratings

• Lowest level criteria connected to the
  alternatives (companies) are called attributes.
• Each alternative is scored or rated against these
  attributes.
• Attribute scales are created by the team and are
  often more quantitative.
• Lets look at initial cost...

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Initial Cost Scores

• The screen for initial cost shows the scale is
  in m (millions of dollars) with the best score
  being 6.0 million and the worst 11.0 million.
• The ratings for each company is what they bid in
  their RFP.
• Company Cs bid is lowest with 6.7 million.

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Management Attribute

• Most of the attributes in this model have
  quantitative scales.
• However, management is more qualitative, and is
  based on the procuring companies assessment of
  the bidders.
• Lets look at the management attribute...

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Management

• This is a verbal scale generated by the team
  ranging from The best to Disastrous.
• Company A is considered to be well managed
  while Company C is poorly managed.
• Once the model has been completely rated, an
  initial review of the results follows...

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Lets Review the Initial Results!
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Preliminary Results

• A preliminary review of the results shows Company
  A with the highest ranking, followed closely by
  Company D (a perfect score is 1.0).
• Company C is not far behind, but has failed a
  rule (indicated by the red bar).
• CDP allows the user to include simple rules that
  the alternatives are tested against.

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Rules

• In this case, Company C failed the rule that the
  transmit power must be greater than 80.0 KW.
• Company C is not eliminated - just flagged.
• The decision group can review the failure and
  decide what to do.
• Further analysis of the model is required to
  determine if the results are reasonable and
  robust...

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Let's Look at Contributions to Results by
Criteria
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Contributions by Criteria

• This screen shows the contribution to results
  from main criteria level.
• Company A does well in cost and performance
  compared to Company B.
• Company C does well in these criteria, but it
  falls short in manufacturing.
• The group decided the contributions are
  reasonable given the weights of the attributes
  and the ratings of the alternatives.

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The Next Question is, What Happens to the
Results if the Weights are Varied?
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Sensitivity to Weights

• CDP allows the user to ask the what if
  questions.
• It makes the task easier by calculating and
  ordering the weights that are most sensitive to
  the least sensitive.
• The next screen shows the sensitivity ...

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What About the Risk in the Decision due to
Uncertainty in Data?
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Uncertainty

• Uncertainty in the input data translates into
  risk in the decision.
• The procurement team decided to use CDPs
  capabilities to analyze the uncertainty in this
  procurement.
• Uncertainty in the data is reflected in
  probability distributions and input in the model.
  
• Click Uncertainties in the Rating Window...

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Specifying Uncertainty Distributions

• This screen shows how uncertainty in the initial
  cost for Company B was input into the model.
• Uncertainty in initial cost is characterized by
  a Triangular distribution.
• This data could be analyzed in Crystal Ball to
  determine the distribution prior to inputting in
  CDP.

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Lets Look at Results with Uncertainty Included!

• Uncertainty included for many criteria (cost,
  performance, etc.)

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Results with Uncertainty

• The grayed bars over the decision bars represent
  the combined uncertainty distributions.
• With uncertainty, Company D is the most preferred
  47 of the time and Company B is the most
  preferred 45 of the time.
• These new results expose the risk in this
  decision.

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Procurement Teams Decision!

• The team decides that, with the existing
  available data, making a decision with the degree
  of uncertainty indicated in the results is not in
  their best interest.
• The team decides to focus on the data and
  initiate an effort to reduce the uncertainty.
• CDP helps them by exposing where the uncertainty
  is having the most effect on the results...

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Contributions from Uncertainty

• Using the contribution by uncertainty function
  allows the team to decide where it is most
  meaningful to focus their efforts.
• This screen shows that the life cycle cost,
  initial cost, and critical path are the
  largest uncertainty contributors to Company Bs
  results.
• This is where their effort should be focused!

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Which Company ranks number one and is the
recommended supplier?
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No Winning Bidder yet! Not until Uncertainty is
reduced - (the decision will be a sound one when
made)
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Stop!
We Need to Document!
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Documenting the Process and Results is Made Easy
by CDP

• At the end of each group session a report can be
  generated for peer review.
• A final report is prepared when the final
  decision and recommendation to management is
  made.
• Lets look at the report screen - note report
  option is selected...

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Select Contents

• Click on content in the print screen to select
  contents for report.
• Simply click on the desired items to be included
  in the report...

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Management gave the team a gold medal for their
effort!
You too can use this process in making decisions
in every other area of engineering and business,
not just in making procurements!