W2_AEP_Making Decision with Multi-Attributes: A Case in a Dispute Clause on the Standard Guidance


Problem Identification: A Dispute

A new Standard Guidance (SG) had been published for 18 months and implemented as one of procedures to be followed by contractors. It covers a broad and various activities in capital expenditures which are cost recoverable: facility projects, oil well drillings and workovers, asset purchase on supporting equipments. In August 2013, it is recorded at about 75% of submitted proposals concerning oil well drillings and workover activities are approved, and the rest are being evaluated. The performance of approval process itself  is 98% within schedule. While many of the contractors find the SG is useful and helps them organized in claiming their capital expense, some are reluctant. Unfortunately, they are those who provide the largest revenue contribution. The root cause of this is a clause stating the “effective date” of certificate is interpreted differently. Therefore, decision shall be made by management board to resolve the dispute.

The Alternatives and its Attributes

Four alternatives are generated as feasible solutions to the dispute. Those are: (A) Apply the SG As Is; (B) Amend the Dispute Clause; (C) Privilege for Selected Contractor; and (D) Full Revision.

It is identified that following risks are attributed to each alternative: (1) Fairness to the contractors; (2) Bureaucracy for Authorization; (3) Stakeholders Participative; (4) Time Consuming; (5) Contractor’s Productivity in applying those alternatives. Indeed, there are rooms for improvement, but to amend and/or revise the SG spends time and the original SG still have to be remain in place.

Analysis and Evaluation

The four Noncompensatory Models examined by Sullivan are utilised for making a choice in this case. They are: (a) dominance, (b) satisficing, (c) disjunctive resolution, and (d) lexicography. To quantify the value of qualitative attributes, using scale number 1 to 5 as interpretation to most likely, likely, so-so, unlikely, and most unlikely. Lesser the value, lesser the risks, will be better option to choose. Larger the value, maximize the risks, will be less priority option chosen.

Table 1: Summary information for choice the option

         table 1

 To check for dominance in Table 1, pair wise comparison of each option’s set of attributes must be inspected. It is clear from Table 2 that A dominates B and C, so B and C eliminated from further consideration. With dominance, it is not possible to select the best option.

Table 2: Check for Dominance among Alternatives

 table 2

 To illustrate the satisficing model, acceptable limits must be established for each attributes. The feasible ranges is given in Table 3. Comparison of attribute values for each option against feasible range revelas that option D less desirable type of high bureaucracy level and long time consuming to be applied. Notice that satisficing, by itself, did not produce the best alternative.

Table 3: Feasible Ranges for Satisficing

 table 3

 By applying the feasible ranges in Table 3 to the disjunctive resolution model, all option would be acceptable because each has at least one attribute value that meets or exceed the minimum expectation. As shown in Table 4, this model does not discriminate well among the four options.

Table 4: Feasible Ranges for Disjunctive Resolution

table 4

 Many models, including lexicography, require that all attributes first be ranked in order of importance. To obtain a consistent ordinal ranking is to make paired comparisons between each possible attribute combination. Illustrated in Table 5, each attribute can be ranked according to the number of times it appears on the left-hand side of the comparison. In this case the ranking is found to be productivity > fairness > participative > time consuming > bureaucracy.

Table 5: Ordinal Ranking of Attributes

table 5

 Table 6 illustrates the application of lexicography to the ordinal ranking developed in Table 5. The final choice would be Option D because productivity is the top-ranked attribute, and Option D’s productivity rating is the best of all. If Option A’s productivity had been rated as good, the choice would be made on the basis of less bureaucracy, less participative conflict, and less time consuming. This would have resulted in the selection of Option A. Therefore, lexicography does allow the best option to be chosen by management.

Table 6: Application of Lexicography

table 6

 

Selection of the preferred alternative

Utilizing Noncompensatory Models in the above results that Option D or Full Revision to the Standard Guidance (SG) is chosen as the preferred alternatives. This is chosen as the productivity level of the contractors to comply the guidance is highest and fairness apply to all contractors.

To be followed up

Management may declare a good willing to have a full revision to the SG in the near future, while the contractors are highly expected to comply and have respect to the original SG which is still remaining in place. The contractors must be encouraged to give their feedback documented and propose the best solution for each problem occurred when applying the original SG. A task force may be established and ordered to achieve this management’s good will.

References

Brassard, M., Ritter, D., & GOAL/QPC (2010). The memory jogger 2: Tools for continuous improvement and effective planning (pp. 136-145). Salem, N.H: Goal/QPC.

Brynielsson, J., & Wallenius, K. (2003). A Toolbox for Multi-Attribute Decision-Making. KTH Department of Numerical Analysis and Computer Science. Retrieved from http://www.nada.kth.se/~joel/TRITA-NA-0307.pdf

Hahn, W. J., Seaman, S. L., & Bikel, R. (2012, August). Making Decisions with Multiple Attributes: A Case in Sustainability Planning | Graziadio Business Review | Graziadio School of Business and Management | Pepperdine University. Retrieved September 5, 2013, from http://gbr.pepperdine.edu/2012/08/making-decisions-with-multiple-attributes-a-case-in-sustainability-planning/

Sullivan, W. G., Wicks, E. M., & Koelling, C. P. (2012). Decision Making Considering Multiattributes. In Engineering Economy (15th ed., pp. 551-569). Upper Saddle River, N.J: Prentice Hall.

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1 Comment

Filed under Afriandi EP, Week 02

One response to “W2_AEP_Making Decision with Multi-Attributes: A Case in a Dispute Clause on the Standard Guidance

  1. AWESOME Pak Andi!! Excellent case study, outstanding analysis and your citations were spot on!! Great work!!

    And as you cited Engineering Economy appropriately, you not only can take credit for your W2 blog posting, but also one of your questions from Chapter 14 in Engineering Economy. Wonderful example of “working smart, not working hard”.

    Keep up the good work and looking forward to seeing more postings of this quality in the future…..

    BR,
    Dr. PDG, Singapore

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