Week 12_ SeeGod Meregini_ Choosing a project execution strategy given nonmonetary considerations.

Problem Recognition/Evaluation

Recently, top management in my company wanted to make a decision on which pipeline installation strategy to use in executing an important project XYZ. There was an agreement to base the final decision on a diverse attributes because of multiple objectives in evaluating the engineering and business ventures of the project. My department was given the task to come up with a “first pass” solution.

A root cause analysis on the reason behind this change initiative is shown below:

·         There is an increasing pressure to innovatively carry out construction works because the project initially had a plan which was not seen as meeting business objective due to previous delays in earlier stages of planning.

·         There is an opportunity to use improved and new technology.

·         There is a change in organization and leadership. This new leaders wanted to improve the system with cutting edge processes and procedure.

·         There is also a need by management to execute the project in a cost effective way in order for the business partners to readily accept obliging to payments.

I was faced with a decision to find out a “first pass” solution as I was leading the team for the work.

Development of Feasible Alternatives/Solutions

Four alternatives were already decided by my superiors and handed over to my team.

A do nothing alternative was included because the project was not a new one, it had an old installation strategy and only needed a new strategy (if applicable). Hence, there was a need to include the “as is” scenario (old strategy).  

The installation alternatives are:

·         Alternative 1      Do nothing

This would involve using the initial pipeline installation strategy of trenching and dredging in getting the job done.

·      Alternative 2     New technology + Trenching

This installation strategy would involve the company utilizing both the New Technology and trenching techniques in executing the pipe laying work.

·         Alternative 3     New technology + Dredging

Here, the installation would entail the use of both dredging methods and New Technology in carrying out the pipe laying work.

·         Alternative 4      New technology

In this alternative, only the New Technology method would be deployed throughout in the installation of the pipe works.

Probable Outcomes and cash Flow  of Alternatives / Solutions.

A number of meetings were held with various key stakeholders and SMEs (subject matter experts) in order to determine the attributes to use, such that in a collective sense, all attributes are assumed to be sufficient for the purpose of selecting the best alternative.

As the team lead, I made sure each attribute captured a unique part of the decision problem.

A summary of information gathered is shown below. Costs used are factored but have same equivalence with original for the purpose of showing the final result.

	Feasible Alternatives
Attribute	(Do nothing)Trenching /Dredging	Trenching + NT	Dredging +NT	NT
In-house Cost  Estimate $MM (with Limits)	33	50	60	110
Pipeline Security	Low	Medium	High	Very High
Environmental Impact	Very High	Medium	High	Low
Schedule Risk	Low	High	High	Very High
Ease of Maintenance	Medium	Medium	Low	Low

 Table 1 showing summary information of attributes and alternatives

Selection Criteria / Attributes in determining the solution

A total of five (5) attributes were judged sufficient, such that differences in values assigned to each attribute are presumed to be meaningful in distinguishing among feasible alternatives.

1.    In-house cost estimate $MM (with limits)

2.    Pipeline Security

3.    Environmental Impact

4.    Schedule risk

5.    Ease of Maintenance

Analysis and Comparison of the alternatives

In comparing the alternatives, ranking of the attributes was done such that relative weights were assigned with higher numbers signifying greater importance. Normalization of these relative ranking was also done.

I also considered the fact that since the partial contributions of all attributes for a particular alternative are unequal because of varying importance rankings, I would use an additive weighting technique.

This involves converting the attribute value to a nondimensional form and multiplying the result with the normalized relative weight for the attribute to arrive at a weighted score for the attribute. The weighted scores of all attributes are then summed to arrive at an overall score for each alternative.

I considered this an appropriate method because it includes both the performance ratings and importance weights for each attribute when evaluating the alternatives.

Below is a quantitative analysis of the alternatives

Attribute	Ordinal ranking	Relative ranking=Ordinal ranking +1	Normalized weight
In-house Cost  Estimate $MM (with Limits)	3	4	0.20
Pipeline Security	5	6	0.30
Environmental Impact	4	5	0.25
Schedule Risk	1	2	0.10
Ease of Maintenance	2	3	0.15

    Sum = 20                 Sum =1.00

Fig 1.showing ordinal and relative ranking including the normalized weights of each attributes

An ordinal ranking is simply an ordering of attributes from the most preferred to the least preferred.

Relative rank =ordinal ranking + 1.  Scale of 1 to5. A rank of 5 is best.

Before the above ranking was established, a stakeholder had opted for cost to be higher in ranking than environmental impact, and this changed the final result to ALTERNATIVE 2.

A decision to involve the management necessitated more consultations with other key stakeholders including management and the above ranking was agreed upon.

Attribute	Value	Rating Procedure	Dimensionless Value
In-house Cost  Estimate $MM (with Limits)	33	110-cost/110-33	1.000
	50		0.779
	60		0.649
	110		0.000
Pipeline Security
Low	1	Relative rank-1/3	0.00
Medium	2		0.33
High	3		0.67
Very High	4		1.00
Environmental Impact
Low	1	4-impact rank /3	1.00
Medium	2		0.67
High	3		0.33
Very High	4		0.00
Schedule Risk
Low	1	4-schedule risk  rank /3	1.00
Medium	2		0.67
High	3		0.33
Very High	4		0.00
Ease of Maintenance
Low	1	Relative rank-1/3	0.00
Medium	2		0.33
High	3		0.67
Very High	4		1.00

Fig 2 showing nondimensional scaling of attributes

This means standardization of attribute values by converting them to nondimensional form.

In the calculation of this nondimensional form, points to note are:

·         when large numerical values such as cost, schedule risk,& Environmental Impact are considered to be undesirable, formula = Worst outcome- Outcome made dimensionless

Worst outcome – best outcome

·         when large numerical values are considered to be desirable (Ease of maintenance & Pipeline security), formula = Outcome made dimensionless – Worst outcome

Best outcome – Worst outcome

The Additive Weighting Technique

	(Do nothing)Trenching /Dredging		Trenching + NT		Dredging +NT		NT
Normalized weight	Performance	Weight value	Performance	Weight value	Performance	Weight value	Performance	Weight value
0.20	1.000	0.20	0.779	0.16	0.649	0.13	0.000	0.00
0.30	0.00	0.00	0.33	0.10	0.67	0.20	1.00	0.30
0.25	0.00	0.00	0.67	0.17	0.33	0.08	1.00	0.25
0.10	1.00	0.10	0.33	0.03	0.33	0.03	0.00	0.00
0.15	0.33	0.05	0.33	0.05	0.00	0.00	0.00	0.00
0.00	#N/A	#N/A	#N/A	#N/A	#N/A	#N/A	#N/A	#N/A
0.00	#N/A	#N/A	#N/A	#N/A	#N/A	#N/A	#N/A	#N/A
		0.350		0.506		0.447		0.550
								^winner^

Fig 3 showing calculation of normalized weights for each attributes and calculation of scores for each alternative.

Selection of Preferred Alternative

Based on the above quantitative analysis and criteria, I recommended that ALTERNATIVE 4 i.e. using New Technology be selected.

Performance Monitoring/Post Evaluation

This would be monitored by constantly

·         Conducting a Look Back session to determine the effectiveness of the installation strategy in terms of the criteria above.

·          Conducting a Post Look back session after a year of operation to determine the effectiveness of the strategy for use by other future projects.

References

Sullivan, W. G., Wicks, E.M., & Koelling, C.P. (2009). Decision Making Considering Multiattributes. In M.J. Horton (Ed.), Engineering economy (15^th ed.) (chapter 14) (pp. 551-568). New Jersey, NJ: Pearson Education, Inc.

Sullivan, W. G., Wicks, E.M., & Koelling, C.P. (2009). Engineering Economy and the Design Process. In M.J. Horton (Ed.), Engineering economy (15^th ed.) (chapter 1.3) (pp 7). New Jersey, NJ: Pearson Education, Inc.

AACE International Education Board. (2006).Investment decision making. In J.K.Hollmann (Ed), Total cost management framework – A process for applying the skills & knowledge of cost engineering (1^st ed) (chapter 3.3.1.1) (pp.55-56). Morgantown, West Virginia: AACE International.