What is a Decision Matrix, and How Can We Use it?

What Is a Decision Matrix? 

Decision Matrix is also called decision grid, Pugh matrix, problem selection matrix, selection matrix, criteria-based matrix, problem matrix, solution matrix, opportunity analysis, and criteria rating form. 

A decision matrix is a decision-making tool/method that assesses and prioritizes a list of options. At first, a list of weighted criteria is formulated, and each option is assessed against that criteria. The options are listed as rows on a table and the factors as columns. 

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When to Use a Decision Matrix?

Suppose your manager assigns you the task of selecting a new software supplier. You will begin your research and shortlist several good options. How would you make the final decision, considering several factors such as technology, service levels, contract lengths, and more? Such situations can be handled efficiently by employing a decision matrix.

Given the above-mentioned decision matrix example, we can say that a decision matrix is generally used when:

• Comparing multiple similar options
• A list of options has to be narrowed to one choice
• The decision is to be made based on several criteria
• You have to approach the decision from a logical viewpoint rather than an intuitive or emotional one.  

How to Create a Decision Matrix?

Evaluate the best option between alternatives based on various crucial factors and their relative importance, employing the following steps: 

Step 1: Finding the Alternatives

Decision matrices help decide the best option amongst a set of promising choices. Therefore, identifying the options is the first step before building decision matrices. 

For example, you have to launch a website and look for agencies that could create content and design. You find three decent agencies and have to choose one amongst them.

Step 2: Identifying Crucial Points 

Next, you must identify the important considerations to factor into your decision. These critical considerations help strike the optimal decision without any subjectivity.

Considering the example mentioned above, you will now acknowledge some important criteria for selection as pricing, customer support, experience, and customer reviews.

Step 3: Creating a Decision Matrix

Preparing a grid for comparing important considerations between options requires you to list all of your options as the row labels on the table. Include the list of factors as the column headings.

Step 4: Filling the Decision Matrix

The next step in building a decision matrix is to rate every consideration on a predetermined scale. For little variations among options, use a scale of 1-3. For more options, opt for a 1-5 scale, where the highest number is the best. 

This step adds all the logical reasoning to your decision. As each option comes with its pros and cons, rating them is the best way to avoid the struggles of strategic decision-making. 

You must remember that it is not essential to have a number for each option – if none of them is good for a factor under consideration, you can rate them as 0 for that factor.

Step 5: Including Weight

Often, some factors are more important than others. Use a weighted decision matrix in that case. 

For example, continuing our example, suppose you cannot exceed your budget, so the pricing is a critical factor. To add weight to your decision matrix, you will now assign a number (between 1-3 or 1-5) to each consideration. 

Step 6: Multiplying Weighted Score

To proceed further, you will multiply the weight by each consideration. This way, more important considerations are given more weight.

The decision matrix for our example will be as follows:

Step 7: Estimating the Total Score

After multiplying the weighted score, add up all of the considerations for every row. A clear number-based answer will tell you the best decision.   

Considering our decision matrix example, we will have the following grid:

Results: We can see that Agency 2 has the highest score, and therefore, it is the best decision based on the factors taken into consideration. Although Agency 1 had the best customer reviews, the combination of reviews, experience and cost make Agency 2 a better option. 

Decision Matrix Example

Consider another decision matrix example to understand better how decision matrix analysis works. 

Situation: Suppose you have to buy a smartphone, and you have four options to select from. 

Factors: The factors that matter the most to you are as follows:

• Price
• Battery life
• Memory
• Camera
• Display

We will consider both weighted and unweighted decision matrix analysis to reach a conclusion. The estimated score for each of the four options will be as follows:

Results: Smartphone 2 is the best option despite being a bit expensive when compared to others. 

Other Decision-Making Alternatives

When decision matrix analysis doesn’t turn out to be feasible for your situation, you can try other alternatives like:

• Eisenhower matrix: A 2x2 grid that helps prioritize tasks by importance and urgency. It is useful when you deal with various non-similar tasks and have to decide which one to work on first. 
• Stakeholder analysis map: Deciding which stakeholders to include, consult or inform in a project is crucial and can be done effectively by creating a stakeholder analysis map. It categorizes stakeholders on the basis of their relative influence and interest. You can create a RACI chart - Responsible, Accountable, Consulted, and Informed. It helps decide the main decision-maker for every task.  

Decision-Making Tools That Simplify Processes

Some software applications can help you to map out all the possible alternatives as well as the chances of success or failure. These decision-making tools provide a useful way to make the right choice at the right time. For instance, you get decision matrix templates with Salesforce that makes the process much quicker. Some of the most popular decision-making tools are as follows:

• Force Field Analysis – SmartDraw
• Decision-Making Diagram – Lucidchart
• Decision Matrix – Mindtools
• Strategy Map – Cascade Strategy
• Pareto Analysis – Visual Paradigm
• Break-even analysis – Good Calculators
• SWOT analysis - Mindview

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Become a Project Leader in 2022

As the world picks up the pace, you have to adopt smart and logical practices that help you thrive in stiff competition. Gone are the days when you would flip coins for decision-making. Employ the best methods and tools for both complex and simple decisions in project management to effectively factor in important criteria and make the best decision for your organization. 

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