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Module 2-Numeric Scoring Models

The document discusses various numeric scoring models for project selection, including unweighted and weighted factor models. It highlights the advantages and disadvantages of each model, emphasizing the importance of criteria weighting and the uncertainty involved in project outcomes. Additionally, it addresses risk considerations in project selection, noting the uncertainty of costs and benefits.

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zstzst735
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6 views11 pages

Module 2-Numeric Scoring Models

The document discusses various numeric scoring models for project selection, including unweighted and weighted factor models. It highlights the advantages and disadvantages of each model, emphasizing the importance of criteria weighting and the uncertainty involved in project outcomes. Additionally, it addresses risk considerations in project selection, noting the uncertainty of costs and benefits.

Uploaded by

zstzst735
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Numeric Models: Scoring

• Unweighted 0–1 factor model


• Unweighted factor model
• Weighted factor model

2-1
Unweighted 0-1 Factor Model
• Factors selected
• Listed on a preprinted form
• Raters score the project on each factor
• Each project gets a total score
• Main advantage is that the model uses multiple criteria
• Major disadvantages are that it assumes all criteria are of equal
importance

2-2
Unweighted 0-1 Factor Model Example

2-3
Unweighted 0-1 Factor Model
• Advantage
• Uses several criteria in the decision process
• Raters score the project on each factor
• Disadvantage
• Assumes all criteria are of equal importance
• Does not allow for any gradation of the degree to which a specific project
meets the various criteria

2-4
Unweighted Factor Scoring Model
• Replaces ‘x’ with factor score
• Typically a 1-5 scale with 5:very good, 1:very poor
• Column of scores is summed
• Projects with high scores are selected

2-5
Unweighted Factor Model
• Each factor is weighted the same
• Less important factors are weighted the same as important ones
• Easy to compute
• Just total or average the scores

2-6
Weighted Factor Model
• Each factor is weighted relative to its importance
• Weighting allows important factors to stand out
• A good way to include nonnumeric data in the analysis
• Weights need to sum to one
• All weights must be set up such that higher values mean more
desirable
• Small differences in totals are not meaningful

2-7
Weighted Factor Model Example

2-8
Advantages of Scoring Models
• Allow multiple criteria
• Structurally simple
• Direct reflection of managerial policy
• Easily altered
• Allow for more important factors
• Allow easy sensitivity analysis

2-9
Disadvantages of Scoring Models
• Relative measure
• Linear in form
• Can have large number of criteria
• Unweighted models assume equal importance

2-10
Risk Considerations in Project Selection

• Both costs and benefits are uncertain


• Benefits are more uncertain
• There are many ways of dealing with risk
• Can make estimates about the probability of outcomes
• Subjective probabilities
• Uncertainty about:
• Timing
• What will be accomplished?
• Side effects

2-11

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