decisionanalysisprocessphases0102The decision analysis process combines systems analysis, probability theory, and decision theory 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 coaches to help decision makers in corporations around the world, the military, and at all levels of government.

This deck of 60 slides is intended to be used by decision consultants and decision coaches when they are training project teams.

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 show how  popular tools are used, and to illustrate 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.

processimage002The 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.