Alternative analysis explained including the steps

Article by: Ben Janse

Last update: December 9, 2023

Alternative analysis: This article explains the alternative analysis in a practical way. The article includes the definition of the alternative analysis, followed by an explanation of the usefulness and usability of this technique. Enjoy reading!

What is an alternative analysis?

An alternatives analysis is a method used to evaluate different routes or alternatives to achieve a certain goal and give decision makers choices for continuing existing programs or starting new ones.

Widely used in project management, the method looks beyond the status quo to get work done.

The definition of alternative analysis

The term alternative analysis refers to a multi-criteria analysis used in traditional project management, mostly in software development. It helps teams respond to unpredictable situations by performing sprints.

Which factors are important in an alternatives analysis?

Several factors are considered here. Consider operational factors such as cost, risk and effectiveness, but also the shortcomings of these factors. Supporting tools are used to carry out such an analysis, such as a sensitivity analysis, cash flow analysis and a cost-benefit analysis.

An analysis of alternatives (AOA) is part of the decision-making process that is maintained when analyzing existing portfolios, programs and projects, or when starting a new project. This decision-making process helps the project manager to operate in a cost-effective manner and avoid unnecessary duplication. It therefore reduces the risk of the overall failure of the project.

Step-by-step plan for performing an alternative analysis

Go through the step-by-step plan below to get started with performing an alternative analysis.

Step 1: identify objectives

The first step of this process involves defining supporting decisions and objectives for the project.

Also identify stakeholders and make an overview of the most important interests to be served.

In addition, define the efforts needed to meet this requirement, set up a research team and start developing the project plan.

Step 2: analysis framework, as a base for the alternative analysis

The second step revolves around identifying the problem statement regarding the alternative analysis.

Determine the scope for the alternatives, the context and the basis. Also note any considerations and assumptions made in this process. The criteria in question are the center of the analysis.

Which criteria are chosen depends on the situation.

Examples of criteria are:

Environmental impact
Political aspects
Social aspects
Financial aspects
Cost-benefit
Relevance
Availability of resources

Step 3: define alternatives

The third step involves actually identifying the alternatives that are possible. Do this through extensive research. Use all research opportunities that add value to this process. Only explore options that fit within the defined scope and context.

Step 4: analyze alternatives

The fourth step is to analyze the alternatives. Assess each option against the criteria provided.

Step 5: compare alternatives

After all alternatives have been identified, the advantages and disadvantages associated with these alternatives must be determined.

Step 6: report the alternatives

Compare the results of the comparison of the alternatives and decide which alternative is the best option. Consider in particular the interests and needs of the stakeholders.

Alternative analysis: evaluate strategies

Why is it actually important to evaluate alternatives to strategies, for example? The main reason for this is that new information can be obtained about new plans.

This allows a manager to know, for example, whether new policies will work for his teams and to identify opportunities to improve business processes that would otherwise remain hidden.

The manager also finds out which adjustments are needed to make the new strategy work properly.

Evaluation also helps identify aspects of a strategy that may pose challenges. This makes it possible to adjust or replace the policy in time to cope with unexpected circumstances.

Tips for comparing alternatives

Below you will find some general tips for comparing alternatives, for example strategies.

Internal consistency

Be consistent in doing the comparisons. In addition, make sure that the strategies being compared are consistent with the other strategies and policies in the organization.

Therefore, determine whether a strategy meets this requirement by comparing it with other policy points.

A strategy is internally consistent when it does not conflict with existing policy and fulfills a unique function. All of this must be aimed at achieving the objectives of the organization.

Environmental consistency

Environmental consistency has to do with how well a policy responds to the environment around it. A company’s environment includes any outside influence that a company interacts with.

It also includes the opinions of customers, other organizations and new technologies.

Suitability for existing resources

Resources are the things by which an organization achieves its goals. Common goals are money, staff with expertise and physical facilities such as buildings and networks.

When evaluating strategies, it is important to check whether a company has the right resources to implement them. A simple example is hiring additional employees.

It is then crucial that there is money to pay the salaries of these people.

Risk management, based on the alternative analysis

Strategies nearly always involve at least a small amount of risk. When evaluating the different strategies, it is therefore necessary to determine how this risk compares to the benefits of implementing them. Risk management is an important aspect when you compare alternatives from the alternatives analysis.

It’s Your Turn

What do you think? Do you recognize the explanation of the alternative analysis? Have you ever performed an alternative analysis? Or a multi-criteria analysis? What other supporting tools for comparing options are you familiar with? Do you have tips or comments?

Share your experience and knowledge in the comments box below.

More information

Georgiadis, D. R., Mazzuchi, T. A., & Sarkani, S. (2013). Using multi criteria decision making in analysis of alternatives for selection of enabling technology. Systems Engineering, 16(3), 287-303.
Hofstetter, P., Bare, J. C., Hammitt, J. K., Murphy, P. A., & Rice, G. E. (2002). Tools for comparative analysis of alternatives: competing or complementary perspectives?. Risk Analysis: An International Journal, 22(5), 833-851.
Stufflebeam, D. L., Shinkfield, A. J., Stufflebeam, D. L., & Shinkfield, A. J. (1985). An analysis of alternative approaches to evaluation. Systematic Evaluation: A Self-Instructional Guide to Theory and Practice, 45-68.

How to cite this article:
Janse, B. (2023). Alternative analysis. Retrieved [insert date] from Toolshero: https://www.toolshero.com/project-management/alternative-analysis/

Original publication date: 03/14/2023 | Last update: 09/12/2023

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Article by:

Ben Janse

Ben Janse is a young professional working at ToolsHero as Content Manager. He is also an International Business student at Rotterdam Business School where he focusses on analyzing and developing management models. Thanks to his theoretical and practical knowledge, he knows how to distinguish main- and side issues and to make the essence of each article clearly visible.