Week 4_ Agbato Oluwabusayo_Choice of accommodation_Week 15 _SeeGod Meregini

Problem Recognition/Evaluation

I was faced with a decision to select a plan to change my housing accommodation.

The problem was making up my mind on the choice of plan in changing my accommodation.

Another reason for my analysis was to find out if I really needed to make changes.

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

· There is an increasing requirement to move closer to the work place due to heavy traffic flow in my environment.

· There is a health implication due to effects of strenuous driving.

· We (my wife and I) wanted a change of environment.

· We wanted to stay in a quieter environment though my current place was lovely.

· We recently made extra money and felt a need to make some changes.

Development of Feasible Alternatives/Solutions

After consultations with my wife, two proposals and do nothing compose the list of feasible alternatives (choices) in this decision problem.

The alternatives were:

· Alternative 1 Renting in Housing Estate 1

This is the closest distance to the place of work.

· Alternative 2 Renting in Housing Estate 2

This would involve moving to a closer distance to place of work.

· Alternative 3 “Do nothing”

This would involve staying in the same house and not moving at all.

Probable Outcomes and cash Flow of Alternatives / Solutions.

We gathered data by talking to estate valuers, lawyers and some friends that accomplished some of the alternatives listed above. This was done 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.

I made sure each attribute captured a unique part of the decision problem.

A summary of information gathered is shown below.

	Feasible Alternatives
Attribute	Housing Estate 1	Housing Estate 2	(Do nothing) Current House
Rent ($)	70,000	56,000	46,000
Distance from Children school	Low	Low	Medium
Floor Space & General Aesthetic of House	Medium	Low	High
Closeness to Church	Medium	Medium	Medium
Distance from work/Traffic	Medium	Medium	Low
Security/Safety	Medium	Medium	Medium

Table 1 showing summary information of attributes and alternatives

Selection Criteria / Attributes in determining the solution

A total of six (6) attributes were judged sufficient, such that differences in values assigned to each attribute are presumed to be meaningful in distinguishing among feasible alternatives.

The list of attributes used was:

· Cost (rent)

· Closeness to church (religious worship centre)

· Distance from work/Traffic

· Security/Safety

· Floor Space & General Aesthetic of house

· Distance to Children school

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
Rent	6	7	0.26
Distance from Children school	1	2	0.07
Floor Space & General Aesthetic of House	3	4	0.15
Closeness to Church	2	3	0.11
Distance from work/Traffic	4	5	0.19
Security/Safety	5	6	0.22
		27	1.00

Sum = 27 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 to7. A rank of 7 is best.

Attribute	Value	Rating Procedure	Dimensionless Value
Rent	46,000	70,000-cost/70,000-33	1.000
	56,000		0.583
	70,000		0.000
Distance from Children school
Low	1	3-children dist. rank/3	1.00
Medium	2		0.50
High	3		0.00
Floor Space & General Aesthetic of House
Low	1	Relative rank-1/3	0.00
Medium	2		0.50
High	3		1.00
Closeness to Church
Low	1	Relative rank-1/3	0.00
Medium	2		0.50
High	3		1.00
Distance from work/Traffic
Low	1	3-Traffic dist. rank/3	1.00
Medium	2		0.50
High	3		0.00
Security/Safety
Low	1	Relative rank-1/3	0.00
Medium	2		0.50
High	3		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, distances from work and children school are considered to be undesirable, formula is shown below:

o Worst outcome- Outcome made dimensionless

Worst outcome – best outcome

· when large numerical values are considered to be desirable (security/safety, closeness to church), formula is shown below:

o Outcome made dimensionless – Worst outcome

Best outcome – Worst outcome

The Additive Weighting Technique

	Housing Estate 1		Housing Estate 2		(Do nothing) Current House
Normalized weight	Performance	Weight value	Performance	Weight value	Performance	Weight value
0.26	0.000	0.00	0.583	0.15	1.000	0.26
0.07	1.00	0.07	1.00	0.07	0.50	0.04
0.15	0.50	0.07	0.00	0.00	1.00	0.15
0.11	0.50	0.06	0.50	0.06	0.50	0.06
0.19	0.50	0.09	0.50	0.09	1.00	0.19
0.22	0.50	0.11	0.50	0.11	0.50	0.11
0.22	0.50	0.11	0.50	0.11	0.50	0.11
0.00	#N/A	#N/A	#N/A	#N/A	#N/A	#N/A
		0.407		0.485		0.796
						^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, it is clear that ALTERNATIVE 3 “Do nothing” be selected.

Performance Monitoring/Post Evaluation

This would be monitored by constantly evaluating

· The additional maintenance cost of staying in the current house like getting a driver.

· The effectiveness of the opportunity costs i.e. the money to be used in renting into the housing estate that could be used in other investments.

· The resultant effect of noise on daily living due to the decision of not changing accommodation.

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.