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About this lesson
Learn how to select the best alternative, and apply a budget to your decision.
Exercise files
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Quick reference
Alternative Selection
Use the value-for-money chart to help you select your alternative(s), and apply a budget to your decision.
When to use
When you have a budget to take into account for selecting your alternatives, and/or if you have costs and other considerations that you want to factor into your decision.
Instructions
Narrowing down your best alternatives
Use a combination of the following tips:
- Focus on the green quadrant and the alternatives along the efficiency frontier (orange line)
- Look at alternatives with high y/x ratios in the table below
- Keep in mind the bubble size and bubble color, which may help be a deciding factor between two similarly desirable options
- Click on any alternative to view the details on the right, which can help you examine two similarly desirable options more closely
Using the alternative selection table
- Click on any header to sort by the values of that column. Click again to sort by the opposite order.
- i.e. for numbers, click once to sort by increasing order, and twice to sort by decreasing order
- Click on the y/x ratio column header to see which alternatives have high y/x ratios
- Click on the light grey funnel icon to the right of an alternative name to filter out alternatives
- Filter alternatives by criteria, score, other considerations, or y/x ratio
- To remove a filter, click on the filter icon and select "remove"
- Remove all filters by going to the options tab in the menu on the right, and clicking the "clear all filters" button at the bottom
Marking an alternative as selected or rejected
- Either click on the alternative on the chart, and click on "select" or "reject" in the details on the right; or click "select" or "reject" in the table below
- A selected or rejected alternative will be automatically removed from the chart
- You can change this by going to the options and under "alternatives shown in chart" selecting which alternatives to show
- Reset your selections by going to the options and under "alternatives shown in chart" clicking the orange "reset all undecided" button
Incorporating a budget
- Under the alternative selection table, enter your budget in the "budget or constraint" field
- "Total, selected alternatives" – sum of the costs of your selected alternatives
- "Total, rejected alternatives" – sum of the costs of your rejected alternatives
- "Total, undecided" – sum of the costs of your undecided alternatives
- "Sum" – sum of the costs of all your alternatives combined (selected, rejected, and undecided)
- "Not yet allocated" – how much of your budget you still have left to allocate to selecting alternatives
Hints & tips
- Make sure to use a combination of metrics for narrowing down your alternatives rather than only focusing on the y/x ratio or only focusing on the efficiency frontier.
- If the lowest possible score for an alternative is not zero (e.g. allocating money to proposals – if the proposal has negative effects, you will be losing money!), scaling scores will help you make better decisions. See how to scale scores in the next lesson.
- 00:05 Now it's finally time to decide on your alternative.
- 00:09 If you didn't specify any costs or other considerations, then you're probably
- 00:14 just going to make your decision based only on the rank of each alternative.
- 00:18 But if you do have any other considerations to take into account,
- 00:22 you'll be able to make much more effective decisions using the value-for-money chart.
- 00:27 So here we're going to go over how to do that.
- 00:32 In my example, I'm comparing different proposals for
- 00:36 how to best allocate government spending.
- 00:38 And in addition to the scores, I also have to take into account the cost for
- 00:43 funding each of these proposals, the confidence in their cost estimates,
- 00:48 and whether or not the proposals fit with the government core business.
- 00:53 I've factored each of these variables in by changing the axes,
- 00:58 the bubble size, and the bubble color.
- 01:01 In general, you want to look at the alternatives in this green quadrant which
- 01:06 shows you the alternatives that have the best value for your money.
- 01:11 And the other thing you want to look at is this orange line here,
- 01:15 which is the efficiency frontier or otherwise known as the Pareto frontier.
- 01:20 This line shows you all of the alternatives that
- 01:22 are unambiguously better than all of the others.
- 01:25 So taking those two things into account,
- 01:29 I see that my best choices would probably be proposal E and proposal W.
- 01:35 Now if I had to made my decision by looking only at the ranks of my
- 01:40 alternatives, then I would have probably chosen proposal
- 01:44 W because that alternative has the highest score.
- 01:48 However, by looking at the chart,
- 01:51 it looks like proposal E might actually be a better option because
- 01:56 it has half the cost of proposal W and only a slightly lower score.
- 02:01 And by looking at the bubble color, you can see that it also fits
- 02:06 better with my government core business than proposal W does.
- 02:10 So these three things combined make me actually lean towards
- 02:15 choosing proposal E even though proposal W has a higher ranking.
- 02:21 Another thing that can be useful when narrowing down your
- 02:25 options is the y/x ratio.
- 02:27 If you have the y-axis set to show the total scores of your alternatives,
- 02:33 and the x-axis to show the cost,
- 02:35 then the y/x ratio is your benefits to cost ratio.
- 02:39 This tells you how much benefit you're getting for the cost.
- 02:43 The higher the y/x ratio, the more benefit you're getting for the cost.
- 02:49 You can see this ratio either by clicking on any alternative on a chart,
- 02:54 and then looking at the details in the menu on the right.
- 02:58 Or you can look at the table below,
- 03:01 which has the y/x ratio of each of the alternatives in one of the columns.
- 03:07 You can sort your alternatives by y/x ratio by clicking on the header,
- 03:12 which will sorted by increasing value or if you click again,
- 03:16 then it'll sort them by decreasing value.
- 03:19 This makes it much easier for you
- 03:21 to see which of your alternatives have the higher benefits to cost ratio.
- 03:27 You can narrow down your choices by filtering out your alternatives
- 03:32 based on any variable like the criteria, the score,
- 03:36 other considerations, or in my case, I want to look at the y/x ratio.
- 03:41 Despite looking at the chart, I'm going to say that I want to look at only
- 03:46 those proposals that have a y/x ratio greater than 2.
- 03:51 I can filter out all the other alternatives by clicking on the light gray
- 03:55 funnel icon up here next to the header and
- 03:58 entering the value I want to filter by, so I'm going to put in greater than two.
- 04:07 And that makes my list so much shorter, and
- 04:10 it also removes a lot of clutter from my chart, which helps me focus only
- 04:15 on the alternatives that are the most promising to me.
- 04:19 Now if you look at the table, you see that actually proposal S and
- 04:23 proposal R have the highest y/x ratio.
- 04:27 So shouldn't those be my most preferable alternatives?
- 04:30 Well on the chart, you see that mostly the high y/x ratio
- 04:35 is because they have such a low cost.
- 04:38 And this is a good example of why you shouldn't rely on this ratio to
- 04:43 find the best value for your money.
- 04:46 Because if you click on proposal S, it shows you that most of the effects of
- 04:50 this proposal are actually either neutral or very small.
- 04:54 So I will gain very little from spending my money on this alternative.
- 05:00 Proposal E on the other hand has stronger results.
- 05:03 So it depends on how much it matters to you to get better results,
- 05:08 but also spend more money.
- 05:10 Notice that the bubble size of proposal E is also smaller than that of
- 05:15 proposal S and R which is actually less desirable to me.
- 05:19 So again, I really have to think about what am I willing to give up for
- 05:24 having a better score?
- 05:26 Once you've decided on an alternative, you can select or
- 05:31 reject any alternative either by clicking on that alternative in the chart and
- 05:36 then clicking on Select or Reject in the menu under right, or
- 05:40 you can go to the table below and click on Select or Reject here.
- 05:45 Once you've done this, this alternative will disappear from the chart.
- 05:49 This is because by default,
- 05:51 the chart only shows you alternatives that are marked as undecided.
- 05:55 But if you want to change this, you can always do so by going to options and
- 06:01 the menu on the right and selecting which alternatives you want to show.
- 06:06 So now that you've decided on an alternative,
- 06:09 it's time to factor in your budget.
- 06:12 This budgeting feature below the table here is going to appear if
- 06:16 you select the x value to represent any summable variable.
- 06:20 So for example the cost, then you're going to see the sums of the costs of
- 06:24 all the alternatives that you've accepted, the ones you've rejected,
- 06:29 and the ones that you haven't yet decided on.
- 06:32 As well as the sum of all of the costs of these alternatives combined.
- 06:37 But keep in mind that these sums only include the alternatives that haven't been
- 06:42 hidden by a filter.
- 06:43 If you want to remove a filter, you can do so either by clicking
- 06:48 on the funnel icon in the appropriate category and clicking Remove, or
- 06:52 by going to the options in the menu on the right and clicking Clear all filters.
- 07:00 Now in the budget field, enter what your budget is, and it'll subtract the cost of
- 07:05 the alternatives you've selected, and tell you how much money you have left to spend.
- 07:11 If you have any money left over, you can either select another alternative or
- 07:16 just choose to do nothing, it's up to you.
- 07:19 This feature is also really useful for any other summable costs, like for
- 07:24 example how much staff you have available to carry out a project.
- 07:28 So now that you know how to select an alternative, go out into the world and
- 07:33 make your best decisions.
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