What Is Multi-Criteria Decision Analysis?

Multi-criteria decision analysis (MCDA) is an objective approach to complex decisions in settings like environmental protection or business. It provides a clear method for assessing a specific situation and determining the best approach to a problem on the basis of available information. Humans naturally engage in activities that resemble multi-criteria decision analysis on a regular basis when they make decisions that involve two or more contributing factors, but this quantifies the process for professional settings. The application of logic can allow people making operational decisions to arrive at the best solution for their needs.

In this approach to making decisions, people explicitly consider all of the criteria involved. They may weigh these by importance, and use an algorithm to assess the situation. For example, staff at a company considering the acquisition of a new division meed to think about issues like cost, regulatory hurdles, and possible benefits associated with the purchase. Traditional approaches to decisions can make it difficult to incorporate all of these concerns into a coherent decision analysis.

Members of a team can apply multi-criteria decision analysis to articulate the factors that could influence a decision, weigh them, and come up with a set of potential outcomes. They can select the most optimal decision on the basis of their findings. An environmental agency might find, for example, that a proposed rule wouldn't provide enough benefits to justify the costs, and might need to revise the rule or develop another approach to the problem. Algorithms can also recognize conflicts that may play a role in the decision.

In ordinary life, people making complex decisions may ultimately act impulsively. This is not an option for settings like business and government, where decisions need to be justified. In the event auditors request documentation to support a choice, people need to be able to provide information to show how they chose to approach the problem. Multi-criteria decision analysis is not only objective, but it can also generate a paper trail which can be used to show interested parties how decisions were made.

Another advantage of a more objective approach to decision making is the ability to review information after the fact. Documentation supporting multi-criteria decision analysis can be examined to determine how and where people may have gone wrong when making a decision. This information can help teams avoid similar mistakes in the future. Each decision can be used as a teaching tool, highlighting good and bad aspects of the process to use in future complex choices.