Decision making in government frequently involves tradeoffs among competing needs. Resource limitations, together with increasing costs of running government operations, make these tradeoffs absolutely necessary. Not all tradeoffs produce results that are desirable or optimal, but without some tradeoffs there will be no basis for making rational decisions. In the public sector, where the costs and benefits of a decision are not all that clear, the distinction between a correct and an incorrect decision often becomes fuzzy. For instance, when a government decides to spend more money on public safety or on welfare or education, it must come at the cost of other alternatives for which the money could have been spent. The choices are complex and often painstakingly difficult, but nevertheless have to be made. A rational decision maker must be cognizant of this reality and make his or her decision by carefully looking into all possible alternatives, their strengths and weaknesses, before making any decision. In doing so, it is presumed that they are guided by an underlying construct that represents their preference structure. Determining the suitable alternatives based on this preference structure is the basis of most multicriteria analysis.
This chapter discusses three well-known methods of multicriteria analysis: value engineering, analytic hierarchy process, and goal programming. All three methods are capable of dealing with multiple alternatives and their attributes, but they differ in the approaches that underlie them. Analytically more sophisticated than value engineering, both analytic hierarchy process and goal programming have been extensively used, especially in decision problems for firms and businesses in the private sector.
Costs that neither enhance quality nor provide much public satisfaction have been a serious concern for governments for a long time. Value engineering, a technique developed for analyzing projects, can be used to systematically identify and help reduce unnecessary costs. 1 Viewed more as a process than a technique, value