I.

Introduction
There is no uniform definition of what decision-making as a science or field of inquiry is.
According to Schermerhorn, Osborn, Uhl-Bien and Hunt (2011,p.196), a common definition
of decision making is the process of choosing a course of action for dealing with a problem
or opportunity. According to Schermerhorn et. al.(2011, p.196-197) further, this definition
constitute the rational decision making model and is usually described as a five step process
as follows :
1. Problem definition in this first step problem and opportunity must be recognized and
defined. This initial step is the satge for information gathering and deliberation to
specify exactly why a decision is needed and what the decision should accomplish.
According to Schermerhorn et. al., there are three common pitfalls during this stage
namely, defining the problem too broadly or too narrowly, focusing on symptoms of
the problem instead of focusing on the causes of the problem and lastly, not
recognizing the right problem that should be dealt with.
2. Analysis of available course of action -

this second step requires the

manager/decision maker to identify and analyze alternative courses of action. In this

stage all possible course of action and their possible consequences are evaluated for
costs and benefits. The manager/decision maker must identify key stakeholders to the
decision and consider the effects of each possible course of action on them.
3. Deciding/choosing on one course of action this is the stage where the decision
maker has to select one course of action from sveral courses of action available to
him. The usual criteria considered in making the choice typically involve costs and
benefits, timeliness of results,impact on stakeholders , ethical soundness
decision and who will make the decision.

of the

4. Implementation of the selected course of action this is the stage where actions are
taken to put the chosen course of action into practice.
5. Evaluation of results and conducting follow up as necessary this final stage of
decision making process entails the decision maker to measure performance results
against initial goals and examines both anticipated and unanticipated outcomes.
In any situation which require decision making, the most pressing issue is how best
can we deal with uncertainty and is there any tool or decision making support system/tool
that can assist the decision maker in reducing uncertainties. Decision making is largely
about managing uncertainty and the associated penalties and rewards. This is why consultants
recommends decision making based on the facts because it reduces uncertainty, as opposed
to other decision making approaches such as decision making based on intuition, decision
making based on anecdotal evidences, and decision making based on the ways things have
always been done (Redman, 2008, p.91)
In today's highly uncertain world, making a decision which has long term effect calls
for a thorough understanding of likely or possible future situations and also the ability to
balance a large number of controllable and uncontrollable factors (Bhushan and Rai,
2004,p.3). However, according to Bhushan and Rai (2004,p.3) further, the time now given to
decision makers to make important decision is ever decreasing. The world has become ever
more unstable, more disordered and more uncertain and therefore requires a more advanced
analytical tools for making such decisions. This is the reason why a thorough, systematic
decision making framework based on scientific footing is needed to analyse and make
decisions in the fast paced world of today.
Selection of the most appropriate decision making tool will depend mostly on the type
of information available and the working knowledge of the decision maker. Among the most
popular techniques are Pareto Analysis, Paired Comparison Analysis, Grid Analysis,
2

Weighing the pros and cons, Force Field Analysis, Six Thinking Hats, the Cost/Benefit
Analysis, Decision Tree and Influence Diagram and countless other tools (Verma,
2009,p.112).
II. The Selected Decision Making Tool
In order to determine which contractor will be engaged for the construction job, we will use a
simple decision-making tool known as Grid Analysis. This method is also known as
Decision Matrix Analysis, Pugh Matrix Analysis or Multi-Attribute Utility Theory (MAUT)
(Ghuman and Aswathappa,2010,p.221). The use of Grid Analysis employs matrices and are
most effective when the decision maker have a number of good competing alternatives and
many factors to take into account in order to make the right decision as to which alternative
to choose (Parcon,2007,p.48).
Ghuman and Aswathappa (2010,p.222) and Parcon (2007,p.48) elaborated the stepby-step procedure on how to use the grid analysis technique in decision making as below.

1.

Step 1 : Decide on the options or alternatives that is available for making the decision

and

list them out. Then, list out the factors that is important for making the decision.

Prepare a matrix (table) and fill in the options and the factors in the matrix. The
options/alternative

should be put as row headings whereas the factors serve as column

heading. Figure 1 below shows the matrix after this exercise is carried out.

FACTOR 1

FACTO
R2

FACTOR
3

OPTION
A
OPTION
B
OPTION
C

Fig. 1 : Sample of Decision Grid Matrix

2.

Step 2 : Assign weight/value to each factor on the basis of its relative importance in

the decision. Show these weight/value as numbers. It is acceptable to have different factors
with the same importance/weight/value. Fig. 2 below shows the matrix after Step 2 is carried
out.
FACTOR 1
Value : 1

FACTO
R2
Value :
4

FACTOR
3
Value : 4

OPTION
A
OPTION
B
OPTION
C

Fig. 2 : Rows and columns headings

3.

Step 3 : The decision maker then must work his way down the columns of the matrix,

scoring each option for each of the factors listed in the matrix. Score each option from 0
denoting poor to , for example, 5 denoting very good. Note that the decision maker does
4

not have to have a different score for each option - if none of them are good for a particular
factor in the decision, then all options should score 0. Fig. 3 shows an example of how the
matrix looks like after step 3 is carried out.
FACTOR 1
Value : 1

FACTO
R2
Value :
4

FACTOR
3
Value : 4

OPTION
A

OPTION
B

OPTION
C

Fig. 3 : Scoring the options in the matrix.

4.
Step 4 : The decision maker then must multiply each of the scores by the values of the
corresponding/intersecting factor (Fig.4).This will provide the overall or weighted scores for
each option/factor intersection. Figure 5 shows the overall scores for each option/factor
intersection after the exercise
FACTOR 1
Value : 1

FACTO
R2
Value :
4

FACTOR
3
Value : 4

OPTION
A

1x1

5x4

3x4

OPTION
B

5x1

5x4

0x4

OPTION
C

5x1

3x4

3x4

Fig. 4 : Multiplying options scores by factors values

FACTOR 1
Value : 1

FACTO
R2
Value :
4

FACTOR
3
Value : 4

OPTION
A

20

12

OPTION
B

20

OPTION
C

12

12

Fig. 5 : The overall scores for each option/factor intersection

5.

Step 5 : Add each overall score in the options individual row. The option that scores

the highest can be selected for making decision. The overall weighted scores for each option
is as follows :
i.

Option A :

20

12

33

ii.

Option B :

20

25

iii.

Option C :

12

12

29

As such, according to the Grid Analysis carried out in the example above. Option A
should be selected for the decision as it recorded the highest overall weighted scores.
III. Application of the Grid Analysis Method to the Question Problem
1.

Step 1 : Firstly we have to decide on the options and alternatives that is available in

order for us to decide which sub-contractor will get the job. We have only two alternatives
here namely Contractor A (Mr. Raymond Ooi) and Contractor B (Mr. Ghulam Rasool). Then
we have to list out the factors that is important for us to reach our decision. With regard to Lai
Hock Builders Sdn. Bhd., we propose three factors to be included i.e. cost,time and quality.
Figure 6 below shows the matrix after this exercise is carried out.

COST

TIME

QUALITY

CONTRACTOR A
(RAYMOND OOI)
CONTRACTOR B
(GHULAM
RASOOL)

Fig. 6 : Rows and Columns headings

2.

Step 2 : The second step require us to assign weight/value to each factor on the basis

of its relative importance in the decision and show these weight/value as numbers. It is
acceptable to have different factors with the same importance/weight/value. We propose to
assign the following value to the factors involved : Quality (value : 1), Time (value : 2) and
cost (value : 3).Cost is given the highest value since it was stated that the main aim of Lai
Hock Builders Sdn Bhd is to minimize their expected cost. Fig. 7 below shows the matrix
after Step 2 is carried out.

COST

TIME

QUALITY

Value : 3

Value :
2

Value : 1

CONTRACTOR A
(RAYMOND OOI)
CONTRACTOR B
(GHULAM
RASOOL)

Fig. 7 : Values of the factors

3.

Step 3 : We then work our way down the columns of the matrix,

scoring each

option for each of the factors listed in the matrix. We give the score from 1 denoting does
not fit our requirement, 2 denoting fits our requirement and 3 denoting exceeds our
7

requirements. Fig. 8 shows an example of how the matrix looks like after step 3 is carried
out.

CONTRACTOR A
(RAYMOND OOI)
CONTRACTOR B
(GHULAM
RASOOL)

COST

TIME

QUALITY

Value : 3

Value :
2

Value : 1

Fig. 8 : Scoring the options in the matrix

With regard to cost factor we give the highest score i.e. 3 points to Ghulam Rasool
since analysis done for both contractors shows that the expected cost will be lower (and thus
the profit margin will be higher) if Lai Hock Builders Sdn. Bhd. engages Ghulam Rasool as
the subcontractor . We come to this conclusion after conducting the analysis in the following
paragraphs.
Firstly, we have to find the variable cost (i.e. cost which is not fixed) and in this case
the variable cost is the penalty cost that Lai Hock Builders Sdn. Bhd. must pay to Mr. Anil
Kumar for late delivery. If Lai Hock Builders choose Ghulam Rasool there is a 50% chance
that Lai Hock Builders will have to pay RM37,500-00 (i.e. RM500 x 75 days) to Mr. Anil
Kumar for late delivery of the project. In mathematical term, the 50% chances of this will
happen amount to RM18,750 i.e. 50/100 x RM37,500. As such the variable cost for this
project is RM18,750. Therefore, the total cost i.e. fixed cost plus variable cost if Mr. Ghulam
Rasool is chosen is RM210,000-00 plus RM18,750-00 which amount to RM228,750-00.
With this total cost, the profit margin if Lai Hock Builder engages Ghulam Rasool is
RM271,250-00 i.e. RM500,000-00 minus RM228,750-00.
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On the other hand, the variable cost if they choose to engage Mr. Raymond Ooi is
zero. This is because Mr. Raymond Ooi has agreed to pay any penalty for late delivery and as
such the total cost i.e. fixed cost plus variable cost is RM240,00-00 . With this total cost, ,
the profit margin if Lai Hock Builder engages Mr. Raymond Ooi is RM260,000-00 i.e.
RM500,000-00 minus RM240,000-00.
The following chart (Table 1) shows the comparison in profit margin for the two
contractors :

CONTRACTOR A
(RAYMOND OOI)

CONTRACTOR B
(GHULAM
RASOOL)

REVENUE

500,000-00

500,000-00

TOTAL COSTS

RM240,00-00

RM228,750-00

NET PROFIT

RM260,000-00

RM271,250-00

Table 1 : Profit Margin Comparison

For Time factor we give 2 points to Mr. Raymond Ooi as he estimates that the delay if
any will not be more than 30 days compared to 75 days if we engage Mr. Ghulam Rasool.
Finally, as far as quality is concerned, we give both the score of 2 points as there is equal
possibility that both will deliver a quality workmanship.
4.

Step 4 : We then must multiply each of the scores by the values of the

corresponding/intersecting factor (Fig.9).This will provide the overall or weighted scores for
each option/factor intersection. Figure 10 shows the overall scores for each option/factor
intersection after the exercise.
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CONTRACTOR A
(RAYMOND OOI)
CONTRACTOR B
(GHULAM
RASOOL)

COST

TIME

QUALITY

Value : 3

Value :
2

Value : 1

2x3=6

2x2=4

2x 1 = 2

3x3=9

1x2=2

2 x1 = 2

Fig. 9 : Multiplying options scores by factors values

COST

TIME

QUALITY

Value : 3

Value :
2

Value : 1

CONTRACTOR A
(RAYMOND OOI)
CONTRACTOR B
(GHULAM
RASOOL)

Fig. 10 : The overall scores for each option/factor intersection

5.

Step 5 : Add each overall score in the options individual row. The option that scores

the highest can be selected for making decision. The overall weighted scores for each option
is as follows :
i.

Contractor A
(Raymond Ooi)

12

ii.

Contractor B
(Ghulam Rasool)

13

10

As such, according to the Grid Analysis carried out in the example above, Contractor
B (Ghulam Rasool) should be appointed as the sub-contractor as it recorded the highest
overall weighted scores.

IV. Conclusion
In decision making, the effects of a decision are assessed ex ante (before the event i.e.
before we know the results of the decision when the decision is carried out in real life) . In
other words, the impact of the decision are not yet apparent, but it will be in the short-term or
long-term future. This means that the consequences of a decision cannot be predicted with
absolute certainty at the time the decision is made.
Nevertheless, a good and structured decision making exercise will reduce many folds
the uncertainties as to the future effects of the decision in contrast to arriving at the decision
intuitively i.e. decision which are made without any systematic review of options. This is the
purpose of using decision making tools as has been done in this short paper. Through the very
simple grid analysis, a basis has been developed for determining which sub-contractor should
be chosen.
However, it must be noted that though decision making tool exist, it can only help
decision maker up to certain extent. According to van Dijk (2008,p.59) the impossibility of
achieving absolute certainty in decision making is not simply due to absence of knowledge
(more information and more knowledge does not necessarily mean more certainty), but
more due to the fact that uncertainty is a constant factor of our life on earth.

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REFERENCES

Bhushan,N. & Rai,K.(2004). Strategic Decision Making: Applying the Analytic Hierarchy
Process. London : Springer-Verlag London Limited
Ghuman,K. & Aswathappa,K.(2010). Management: Concepts, Practice & Cases. New Delhi
: TATA McGraw Hill.
Parcon, P. (2007). Develop Your Decision Making Skills. New Delhi : Lotus Press
Redman, T.C.(2008). Data Driven: Profiting from Your Most Important Business Asset.
Boston MA: Harvard Business School Publishing
Schermerhorn,J.R., Osborn,R.N, Uhl-Bien,M and Hunt,J.G.(2011).

Organizational

Behavior.12th Edn.Hoboken NJ : John Wiley & Sons

Van Dijk,J.(2008). Water and Environment in Decision-making. Delft,The Netherlands :
Eburon Academic Publishers
Verma, D. (2009). Decision Making Style : Social and Creative Dimensions. New Delhi :
Global Indian Publication Pte. Ltd.
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