10.6  Multiple Criteria Analysis

Multiple Criteria Analysis (MCA) is used in the business case stage to evaluate options based on numerous criteria, including value for money. The MCA is an evaluation method used in the both Part B (Service Delivery Options) and Part C (Procurement Options Analysis) decision stages of the business case. In Part B, the MCA approach provides a framework for evaluating potential investment options by evaluating choices against criteria considered critical for the project's success (for example, the project's goals and objectives).

With respect to the analysis of procurement options in Part C, the outputs of quantitative analysis discussed in this paper are presented during the business case stage as a part of an MCA process as one of several elements considered in determining the optimal procurement approach for a project. Examples of other procurement-specific considerations include the ability to address stakeholder interests, meet environmental obligations and ensure a fair and transparent procurement process.

The MCA's development early in the planning process enables the project team to address a wide variety of decision problems, and provides an opportunity to assess the potential of various options to address them. Also, options that are demonstrated to be clearly inappropriate at this stage can be eliminated before significant resources are spent on developing detailed quantitative analyses for them.

A key benefit of the MCA approach in both applications is that it is transparent and relatively easy to understand.

The main output from the MCA is a matrix that summarizes how each procurement option being considered "scores" against the criteria determined by the project team. The comparison between the procurement options is not based on a single, simple decision rule-it usually requires an explicit judgment or "importance weighting" between goals or criteria. Typically, the results from the MCA are summarized as shown in Figure 18 below. Qualitative factors vary from project to project and are judged ordinally with the options being ranked in terms of order of magnitude in satisfying criteria. For example, the "Competition" criterion in Figure 18 is considered to be "good" for the PSC option and "best" for the Shadow Bid. This can be interpreted to mean that the Shadow Bid is better than the PSC model for that criterion. It is important to note that it is up to decision-makers for the project to decide which criteria are the most important. Using the matrix below as an example, if allowing for innovation is the most important criterion, the Shadow Bid model would be the preferred model, but if user satisfaction is deemed to be the most important, the PSC model would prevail.

The most common quantitative criterion is the NPC of the project cash flows under each procurement model and is presented below in Figure 18.

Figure 18:  Multiple Criteria Analysis (MCA) Matrix