Expert Choice Software with AHP - Research Paper Example

Introduction: A project has many different criteria which need to be evaluated. Before starting any venture, it must be analyzed to check whether the particular venture is feasible or not. When business is concerned, innumerable projects are available with varying dimensions and characteristics. The success in such a situation lies in the right selection of the right project at the right time, which is not easier. Project selection criteria: Project is a plan of action or a preceding function. For the success of which, the proceeding must be effective. Irrespective of the area, the project will be definitely involving men, materials and money as basic inputs. The effective utilization of all these resources is essential for the success of the particular project. This is what is done in the process of project selection. In the process of project selection, an in-depth analysis of these inputs involved in each of the project is done, after analyzing all the aspects in detail, a decision is taken regarding the selection of a project. Project management is managing the project in an appropriate way and prioritizing in the right manner with all the necessary variables. All these points shed light on the fact that project selection needs to be carefully done for the right selection. In today’s environment of fierce competition, project management offers a lot towards projects in particular and the business in general. The projects involve a number of phases; each phase will be scrutinized in all dimensions for all the available projects .A conclusion will be drawn with reference towards the merits and demerits of each of the project. The criteria for project selection will be different for different situations and in context of the projects. The basic steps can be The important criteria for project selection can be generally given as in the above figure Definition: Problem rightly defined is half solved. Hence, the available projects need to be defined rightly in all aspects associated with the project. Feasibility Analysis: Once the project is defined, it is checked whether feasible or not. It is not that all defined projects are selected for implementation. There will innumerable available projects in all fields. Once the project is found feasible for selection and implementation, it is taken further. The feasibility analysis involves the analysis on the need of the project, financial feasibility, and credibility. Evaluation: When the project is found feasible in the primary studies, then it is subjected to detailed evaluation. The detailed evaluation involves analyzing all aspects regarding the project in detail, the time for completion, investment required, sources of funds, time of recoup of the investment. Decision: After going through all the pros and cons of the available projects a final decision is made for selection. Analysis with Expert Choice Software: Analytical hierarchy process is a mode of multi-criteria decision making. This is a sort of subjective analysis which analyses the preferences, objectives ,merits ,demerits in varying dimensions rather than providing just an overview of all these. The variables are given as main nodes, sub nodes, super sub nodes and so on for the effective analysis. Decisions are made based on only one criterion, which will not be an effective method at the end of the day. Analysis when done with multiple criteria will enhance decision making by precisely selecting which result is the best suitable decision that matches with their requirements in all respects. Information technology has conquered the world, hence it is obvious that it had proven results in the areas of decision making too. The decision makers are supported with softwares in this field. The applications of multi criteria decision making were more enhanced and found effective with the involvement of softwares in this area. Softwares are now enhancing the decision makers in taking decisions with respect to their needs and are satisfying almost all the requirements of their decision objective. The problem in this method is subdivided into smaller problems of equal dimensions and is programmed. This will enable the decision maker to analyze independently over the sub problems. This sort of analysis helps in providing better results. Analytical hierarchy process finds its application in various areas and the results are found accepted. The Expert choice software has been of immense help in the project selection criteria. Expert choice Pro software helps in the evaluation of decisions making in the context of project selection in a company. There are 3 projects (Project A, Project B, Project C) and these 3 projects are evaluated using the Quantitative information criteria. The quantitative information heads which has been taken for project evaluation are the investment costs, the operating costs, the maintenance costs and the risk costs associated with each project. The projects are evaluated by using the Expert Choice Software. The Expert Choice software package based on AHP performs sensitivity analysis. Using the expert choice software the company can graphically weigh the different options that the company has. Usually project selection is done in quantitative terms by weighing the factors like the return form the project, the cost of the project etc., the risk associated, the project’s real options and the project as a standard for doing future projects. The sensitivity analysis is used to analyze whether the judgments made in the selection of projects are good or not. Sensitivity analysis helps in the identification of the effect of judgments to the user. A ‘sensitivity graphs’ menu item in the Expert choice software shows the weights for each project. When the relative scores of each project are fed then the sensitivity analysis develops graphs in such a form that by examining the graph we can determine the most feasible project. The expert software conducts dynamic, gradient, performance sensitivity graphical analysis also which is very helpful in the evaluation of projects. Quantitative information for project selection can be classified as: Project A Project B Project C 1. Operating costs 500,000 500000 300000 2. Risk costs 30000 20000 40000 3. Investment costs 300000 400000 200000 4. Maintenance costs 120000 150000 200000 Pair wise comparison of the operating, investment, risk and maintenance costs in project selection. The different costs like the investment, risk, operating and maintenance costs have different effects on a project. A pair wise comparison is made between these costs in order to understand the importance of the cost using the Export Choice software. A pair wise comparison of the investment, risk, operating and maintenance costs Investment costs Risk costs Operating costs Maintenance costs Investment costs   Risk costs     Operating costs       Maintenance costs         Considering the operating costs Project A is of reasonable operating cost in comparison with Project B and C in ratio with the respective investment costs. In Project A the operating costs is too high in comparison with the projects B and C. But finding the percentage of the investment cost on the operating cost Project A earns 60%, project B earns 80% and project C earns 66.66%. Making a sensitive analysis using the Expert Choice software the best average percent of investment cost on the operating cost is 69%. Using Expert Choice software Project A Project B Project C Operating costs 500000 500000 300000 Investment costs 300000 400000 200000 Percent comparison 60 80 66.66667 Sensitivity Analysis: Comparison of operating and investment costs of projects A, B and C Percentage comparison of the investment cost on the operating cost of Projects A, B and C.From the above analysis Project B is selected Expert choice pro version 9.0 is a software tool which uses the AHP methodology for the selection of projects. The Expert choice software has been of immense help in the project selection criteria. Expert choice Pro software helps in the evaluation of decisions making in the context of project selection in a company. The main issues which can be identified using this software are the strategic fit and the strategic alignment in the project selection. The concept of strategic alignment and strategic fit can also be identified using this software. The expert choice software solves problems in the project selection using the multiple evaluation criteria of project selection. The expert choice pro software uses the AHP methodology in order to evaluate decisions and weigh the alternative decisions. There are many criteria which need to be discussed while evaluating projects. Some of the major criteria are with respect to marketing, selection of suppliers, procurement of materials, corporate plans etc. Version 9 of the software is more popular and advanced than the version 8 of Expert Choice pro software because the version 8 software is Dos based while the version 9 is windows based. Expert Choice pro software helps in the evaluation of projects using the AHP criteria. The Expert Choice software package based on AHP performs sensitivity analysis. Using the expert choice software, the company can graphically weigh the different options it has. Usually project selection is done in quantitative terms by weighing the factors like return form the project, the cost of the project etc., the risk associated, the project’s real options and the project as a standard for doing future projects. But where this type of project evaluation is not possible then it is not possible to evaluate the criteria properly. In such a situation, the project is evaluated by weighing the criteria. In such a situation, the criterion with the highest weight is the important one but again this is not always true. The sum of the alternative weights can be obtained in percentage form and is a relative indicator. A little variation in weights of criteria can change decisions. The Expert Choice software‘s sensitivity graphs is used to test the probable changes which can be made in the decisions of the project. The Expert Choice software provides five modes of graphical sensitivity analysis. In all the modes, the criteria’s can be manipulated and their effects can be easily recognized. The sensitivity analysis is used to analyze whether the judgments made in the selection of projects are good or not. Sensitivity analysis helps in the identification of the effect of judgments to the user. A ‘sensitivity graphs’ menu item in the Expert choice software shows the weights for each project. When the relative scores of each project are fed then the sensitivity analysis develops graphs in such a form that by examining the graph we can determine the most feasible project. The expert software conducts dynamic and gradient performance sensitivity. Graphical analysis also is very helpful in the evaluation of projects. A project has different values for different users. For E.g. The employees, managers and the directors in a company will have different criteria’s for evaluating a project so the user ratings will be different and the weights allotted will be different. But even though the different users will have different weights yet the final conclusion will be quite the same and this will be clear through the graphical representation study in the sensitivity analysis. The evaluation of projects will be on different aspects like the site analysis, the cost analysis, the score analysis, the pay back period, the rate of return, the NPV analysis and the support system analysis. Finding and results (critique analysis): A database is first created for the project by calculating its NPV, IRR, rate of return or pay back method. The factors like the real value of the project, its future credibility, its strategic fit and alignment, the financial expenses involved, the risk associated with the project, the specific criteria associated with the project are taken into consideration while analyzing a project. Each of the factors is given a different ratings and a score card is prepared on this basis to evaluate the project. Expert choice software is used to determine efficiently the ratings that are provided by each factor and then sensitivity analysis gives the full graph of the factors which are more sensitive and less sensitive by assigning weights to evaluate the project. The help of the Expert Choice software with respect to project evaluation is immense and cannot be neglected. Sensitivity analysis done by using the Expert Choice software in the AHP technique is more reliable than other comparisons made by way of pair wise comparison matrix or by way of ranking through the score card system. Each of the factors with different weights shown in the graphical form through the sensitivity analysis helps in the evaluation of projects. Sensitivity analysis by using the pair wise comparison also produces reliable results and this can be done correctly using the Expert Choice Software analysis. The pair wise comparison of different factors like the project’s pay back time with its returns, the project’s returns with its NPV, the NPV with the factor of real options etc and then by drawing a sensitivity analysis graph which leads to a better comparative analysis in the evaluation of projects. The data that is provided using the sensitivity analysis graph using the Expert Choice Software is reliable and is a correct judgment of a project. Thus the findings or the critical analysis of this discussion is that the evaluating of multi criteria decision in the making of a project is by using the Expert Choice Pro software. Through its updated versions, it provides a very reliable data regarding a project’s value and its future which is worth in comparison with similar projects. Read More