Decision making processes can become complex when there are multiple criteria involved to be. When this is the case, a useful tool to help put things into a more clear, objective view is a weighted scoring model.
To create a weighted scoring model, the following steps are applied:
- Identify the criteria important to the decision process
- Assign a weight to each criterion based on its relative importance in the decision (ideally, so they all add up to 100%)
- Assign numerical scores to each criterion for all of the options being considered.
- Calculate the weighted scores by multiplying the weight for each criterion by its score and adding the resulting values.
Step three in the process involves scoring all three vendors on each of the three criteria areas. The first vendor (Vendor A) submits a proposal meeting the target price and has worked with your company for several years, always delivering on time, on budget, and meeting all agreed expectations. However, this vendor does not meet your most of your sustainability goals and they don’t have any interest in changing their processes at this point in time. Rated on a scale of 1-10, you score Vendor A as follows: Price: 10, Reputation: 10, Sustainability: 5.
The second vendor, Vendor B, also submits a proposal on budget. They are able to meet all of your sustainability goals, however on past projects this vendor has had problems delivering services as agreed. Rated on a scale of 1-10, you score Vendor B as follows: Price: 10, Reputation: 6, Sustainability: 10.
Vendor C is a newer service provider for your company. They have worked successfully with your company over the past 6 months on two projects and they also have a solid reputation in your industry. Their proposal came in a little bit over budget, but still within an acceptable range. They are also very interested in sustainability and are able to meet your requirements in this area at 100%. Rated on a scale of 1-10, you score Vendor C as follows: Price: 8.5, Reputation: 9, Sustainability: 10.
Assembled as a table, the scores for each vendor are shown below.
The final step in the process is to calculate the weighted scores by multiplying the weight for each criterion by its score and adding the resulting values.
As seen here from the table, based on the combination of the raw scores for each criteria area and the relative importance of each criteria, Vendor C has the highest weighted score (9.1), followed by Vendor B (8.8), and Vendor A (8.5).
While the weighted scoring model aids to assess and quantify a decision process such as this, some qualitative and subjective judgement can also be helpful. For example, if the decision were only between vendors A (8.5) and B (8.8), you might decide at the start of the process that each vendor needs to have a minimum reputation score of 8 in order to be considered, taking Vendor B out of the running. Or, a minimum score of 7 might be required for sustainability, eliminating Vendor A. The use of minimum value criteria, when appropriate, can help to increase the usefulness of the tool.
Of course, vendor selection is just one type of decision project managers have to face. A weighted scoring model can be beneficial for all sorts of decisions throughout the life cycle of a project. It can be useful at the start when deciding which projects to select for an organization, when deciding on how to assign various organizational resources to a portfolio of different projects, or even at the end when it is time to decide if a project should be renewed or discontinued.
Any way it is applied, weighted scoring models are valuable tools for project managers – or any managers – to be able to use. For situations where a decision needs to be made in consideration of multiple sources of criteria, this is a tool to consider using for the job.
About the Author: Mark Romanelli ([email protected]) is a full-time lecturer in the Sports, Culture, and Events Management program at the University of Applied Science Kufstein Tirol (FH Kufstien Tirol) in Kufstein, Austria. He is a member of the Project Management Institute and a Certified Associate in Project Management