Decision Matrix Analysis

Decision Matrix Analysis - ToolsHero

This article explains the Decision Matrix Analysis in a practical way. After reading it, you will understand the basics of this powerful decision making method.

What is a Decision Matrix Analysis?

Within organisations it is not always easy to make the right decision with each other. Especially if a specific package of requirements is available and different factors must be taken into account. This means that a new contract for ICT support, for example, is not easily completed. It has to meet a lot of requirements, before choosing from different suppliers. A complete so-called ‘vendor rating’ package comes into play. Not only price, but also conditions, contract duration, support, service, expertise and training for the staff will be important values for making the right decision. The Decision Matrix Analysis is a simple answer to ensure that, when making the best decision, all these different factors are taken into account.

Alternatives

This makes the Decision Matrix Analysis very useful for counting all the alternatives that exist in making the final decision. Especially when there is no clear preferred option, the Decision Matrix Analysis leads the facts that exist and the requirements that the organisation considers important. As a result, a good rational decision can be made, which all parties involved fully agree with.

Application

The Decision Making Analysis is characterised by making the factors and the alternative choices visually clear. The horizontal rows show potential options and the vertical columns the different factors. Weights are added to these factors; the most decisive factor for the organisation is the highest figure. One may determine in advance that 1 counts as least important and increases up to 5 in gradation, which is considered very important. The following steps make the process clear:

Step 1 – on a large sheet of paper or on whiteboard, a matrix is drawn with an x number of rows and an x number of columns. All factors are placed in the columns; if there are 4 there will be 4 columns. All choices are then made in the rows; if there are 3 choices, then there are 3 rows.

Step 2 – the various factors are now examined for each option. If a factor scores very well, there will be a 5 here. If a factor is very bad, a 1 is entered.

Step 3 – in this step, values are assigned to the different factors. If ‘contract duration’ is very important to the organisation, this will get a 5. If the price is less important to the organisation, this will receive a 1.

Step 4 – The weightings from step 3 are then multiplied by the digits entered in the matrix in step 2. This will result in a weighted score.

Step 5 – As a final step, all scores calculated in step 4 are added to each row. The choice with the highest score wins. If there are two choice options with the same final score, the organisation would do well to re-examine the various factors and perhaps assign new weightings. From there, the matrix can be re-entered with only the two remaining choice options.

Decision Matrix Analysis example

In this example, an office considers it important that all 150 employees receive a daily supply of fresh fruit. This is not only tasty, but also provides energy and healthy nutrients. Management has already consulted with various suppliers and has come up with 4 possible options. In addition, management decided that there are a number of factors that should be considered and taken into account in the choice:

  • Budget € 3 per person per week = max. €450 per week (5)
  • Quality A; the best of the best, but ripe and instantly edible (4)
  • 2x delivery per week in 5 baskets; easy to distribute across departments and always delivered fresh (4)
  • Weekly list of options (2)
  • Payment options – 1x per month an invoice (2)

Behind each factor, management has set the relative weighting of importance, which is important later when making the decision; 0 = not important, 1 = somewhat unimportant, 2 = moderate, 3 = neutral, 4 = important, 5 = very important.

Management starts by drawing a table, in which the factors are included in the top of the columns and the various suppliers are placed in the rows, where they are potentially linked to the factors (package of requirements). A short explanation can also be included in the matrix:

Decision Matrix Analysis example - ToolsHero

Each supplier is given a figure that indicates to what extent the factor is met. This is to a degree of 1 (not at all) to 5 (excellent).

Decision Matrix Analysis template

Now that you have read the theory about the Decision Matrix Analysis, you can immediately apply your knowledge in practice. Analyse and count all the alternatives you have and get started with this free Decision Matrix Analysis template. The template is available as an editable Word template and a printable PDF template.

It’s Your Turn

What do you think? What is your experience with the Decision Matrix Analysis? Do you have any additions to the above? Are there tips or good experiences that you want to share with our readers?

Share your experience and knowledge in the comments box below.

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More information

  1. Belton, V., & Stewart, T. (2002). Multiple criteria decision analysis: an integrated approach. Springer Science & Business Media.
  2. Schott, J. R. (2016). Matrix analysis for statistics. John Wiley & Sons.
  3. Wang, J. J., Jing, Y. Y., Zhang, C. F., & Zhao, J. H. (2009). Review on multi-criteria decision analysis aid in sustainable energy decision-making. Renewable and Sustainable Energy Reviews, 13(9), 2263-2278.

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