The decision analysis process combines decision theory, systems analysis, and applied probability in a normative way. The process was originally developed by Professor Ron Howard at Stanford University. Over the last 40 years this process has been used by professional decision engineers and coaches to help executives in corporations around the world, the military, and at all levels of government.
This deck of 60 slides is intended help decision engineers and decision coaches explain the process to their teams or clients.
A case study, a life-cycle cost comparison of the Chevrolet Volt and the Toyota Prius, is used to explain the phases of the process, to illustrate how popular tools are used, and to show step by step calculations.
The highlights include the following:
1) Framing the problem using a decision hierarchy and decision diagram,
2) Gathering the data at hand and building a spreadsheet model to deal with technical/economic complexities,
3) Using good financial practices to deal with cash flows that occur over time (Net Present Value),
4) Doing sensitivity analysis to learn what is important in the choice between options,
5) Identifying the key uncertainties and expressing them as probabilities,
6) Generating probability distributions on the NPV, and
7) Calculating value of information.
The Decision Analysis Process is the analytical backbone of the Collaborative Design Process. This presentation is a companion to the Coach’s Guide to the Collaborative Design Process.