An Approach to Quantitative Decision-Making: Analytical Hierarchy Process

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Topics: PMO

Format: Evaluation Assessment

The Analytical Hierarchy Process (AHP) is a quantitative decision-making methodology that uses pair-wise comparisons to:

• Determine the importance of relative evaluation criteria, and
• Determine the relative strengths of decision alternatives.

AHP is particularly useful in situations where difficult decisions between complex alternatives, such as package software solutions, must be made. In these situations, decisions cannot be solely based on subjective or intuitive considerations. Faced with complex alternatives, decision-makers often have difficulty accurately determining criteria importance and evaluation ratings. To solve this dilemma, AHP uses pair-wise comparisons to consider all aspects of the complex problem and their relative importance to the decision-making process. This enables the decision-maker to choose rationally between otherwise confusing alternatives.

When using pair-wise comparisons, the decision-maker determines the relative importance of evaluation criteria by comparing each criterion against every other criterion. For example, three criteria – usability, flexibility, and functionality – are considered within the example described later. Using a defined scale, the decision-maker can determine, for example, that usability is “much more important” than flexibility and “extremely more important” than functionality. Using these determinations, the decision-maker can then calculate what percentage of the decision should be based on each criterion. Using this process, in the example, the decision-maker determines that 53 percent of the decision should be based on usability, 35 percent of the decision should be based on flexibility, and 12 percent should be based on functionality. 

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