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Home » Finance » Financial Management » Grid Analysis

Grid Analysis

Grid Analysis (also known as Decision Matrix Analysis, Pugh Matrix Analysis or MAUT, which stands for Multi-Attribute Utility Theory) is a useful technique to use for making a decision.

It is particularly powerful where you have a number of good alternatives to choose from, and many different factors to take into account. This makes it a great technique to use in almost any important decision where there isn't a clear and obvious preferred option.

Being able to use Grid Analysis means that you can take decisions confidently and rationally, at a time when other people might be struggling to make a decision.

How to Use the Tool:

The technique works by getting you to list your options as rows on a table, and the factors you need consider as columns. You then score each option/factor combination, weight this score, and add these scores up to give an overall score for the option.

While this sounds complex, in reality the technique is quite easy to use. Here's a step-by-step guide with an example.

Start by downloading our free worksheet, and then work through these steps:

1. The first step is to list all of your options as the row labels on the table, and list the factors that you need to consider as the column headings.

2. Next, work out the relative importance of the factors in your decision. Show these as numbers from, say, 0 to 5, where 0 means that the factor is absolutely unimportant in the final decision, and 5 means that it is very important. (It's perfectly acceptable to have factors with the same importance.) We will use these to weight your preferences by the importance of the factor.

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These values may be obvious. If they are not, then use a technique such as Paired Comparison Analysis to estimate them.

3. The next step is to work your way down the columns of your table, scoring each option for each of the factors in your decision. Score each option from 0 (poor) to 5 (very good). Note that you do not have to have a different score for each option - if none of them are good for a particular factor in your decision, then all options should score 0.

4. Now multiply each of your scores from step 3 by the values for relative importance you calculated in step 2. This will give you weighted scores for each option/factor combination.

5. Finally, add up these weighted scores for each of your options. The option that scores the highest wins!

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Keywords:

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