Analytical Hierarchy Process (AHP)
The Analytical Hierarchy Process (AHP) is a structured decision-making methodology used to prioritize and make decisions when multiple criteria are involved. Developed by Thomas L. Saaty, AHP helps decision-makers evaluate and compare options by breaking down complex decisions into a hierarchy of more manageable sub-problems, each of which can be analyzed individually. The AHP process involves: 1. Defining the problem and determining the goal. 2. Structuring the hierarchy from the top (the goal of the decision) through intermediate levels (criteria and sub-criteria) to the lowest level (the alternatives). 3. Conducting pairwise comparisons of the elements at each level of the hierarchy with respect to their impact on an element above them. This involves using a scale of relative importance to quantify the judgments. 4. Calculating the priority weights for each element by normalizing and averaging the comparison matrices. 5. Synthesizing these weights to determine an overall ranking of the options. AHP is particularly useful in business analysis for making complex decisions that involve qualitative and quantitative aspects, such as vendor selection, project prioritization, or resource allocation. It helps in capturing both subjective and objective aspects of a decision, providing a clear rationale for the chosen option. By quantifying the weights of each criterion and sub-criterion, AHP allows for a systematic comparison of alternatives, ensuring that decision-makers consider all relevant factors and their relative importance. It also enables consistency checking to identify any inconsistencies in the judgments made during comparisons.
Analytical Hierarchy Process (AHP): A Comprehensive Guide
Why Analytical Hierarchy Process is Important
The Analytical Hierarchy Process (AHP) is a crucial decision-making framework in business analysis because it:
• Provides a structured approach to complex decision-making with multiple criteria
• Transforms subjective judgments into objective metrics
• Allows for consistency checking in decision-making
• Helps prioritize requirements when there are competing stakeholder needs
• Enables quantitative comparison of qualitative factors
• Reduces bias in decision-making by decomposing problems into manageable parts
What is the Analytical Hierarchy Process?
AHP is a mathematical technique developed by Thomas Saaty in the 1970s for organizing and analyzing complex decisions. It breaks down decision-making into a hierarchy of more easily comprehensible sub-problems, each of which can be analyzed independently.
AHP is particularly valuable in the PMI-PBA context as it helps business analysts make structured decisions when faced with multiple criteria and alternatives. It transforms qualitative assessments into quantitative values, making subjective comparisons more objective.
How AHP Works: Step-by-Step Process
1. Define the problem and determine criteria: Clearly identify the decision to be made and establish relevant criteria.
2. Structure the decision hierarchy: Create a hierarchical structure with the goal at the top, criteria in the middle, and alternatives at the bottom.
3. Construct pairwise comparison matrices: Compare criteria against each other using a scale (typically 1-9), where:
• 1 = Equal importance
• 3 = Moderate importance
• 5 = Strong importance
• 7 = Very strong importance
• 9 = Extreme importance
• 2, 4, 6, 8 = Intermediate values
4. Calculate priority vectors: Convert the pairwise comparisons into weights that represent the relative importance of each criterion.
5. Verify consistency: Calculate a Consistency Ratio (CR) to ensure judgments are logically sound. Typically, a CR < 0.1 is considered acceptable.
6. Rate alternatives against criteria: Assess how well each alternative satisfies each criterion.
7. Calculate final priorities: Multiply the priority of each alternative by the priority of its criterion, then sum these products to get the overall priority of each alternative.
8. Make a decision: Choose the alternative with the highest overall priority.
Example of AHP Application
Consider selecting a vendor for a new software system based on three criteria: cost, functionality, and support.
1. Pairwise comparison of criteria might show:
• Functionality is moderately more important than cost (3)
• Support is slightly more important than cost (2)
• Functionality is slightly more important than support (2)
2. After calculations, the weights might be:
• Functionality: 0.54
• Support: 0.30
• Cost: 0.16
3. After rating vendors against each criterion and calculating final priorities:
• Vendor A: 0.45
• Vendor B: 0.35
• Vendor C: 0.20
4. Decision: Select Vendor A as it has the highest overall priority.
Exam Tips: Answering Questions on Analytical Hierarchy Process (AHP)
1. Know the fundamental scale: Memorize the 1-9 scale used for pairwise comparisons and what each value represents.
2. Understand reciprocals: If criterion A compared to criterion B is rated 3, then B compared to A is 1/3.
3. Consistency check: Remember that AHP includes a method to check for consistency in judgments. Know that the Consistency Ratio should be less than 0.1.
4. Matrix calculations: Practice calculating priority vectors from comparison matrices. The exam may test your ability to interpret these calculations.
5. Hierarchy structure: Be able to recognize and create proper hierarchy structures with goal, criteria, and alternatives.
6. Practical application: Study examples of AHP in business analysis contexts like vendor selection, project prioritization, and requirement ranking.
7. Strengths and limitations: Be aware that while AHP is powerful, it has limitations such as the possibility of rank reversal when alternatives are added or removed.
8. Integration with other techniques: Understand how AHP can complement other decision-making techniques in the BA toolkit.
Common Exam Question Types
• Calculating priorities from a given pairwise comparison matrix
• Determining if a set of judgments is consistent
• Selecting the appropriate scale value for a given comparison scenario
• Identifying when AHP would be an appropriate technique to use
• Interpreting AHP results and making recommendations
Example Question:
Given a pairwise comparison matrix for criteria A, B, and C with the following values: A to B = 3, A to C = 5, B to C = 2, which criterion has the highest priority?
To solve this type of problem in an exam:
1. Complete the matrix (reciprocals and diagonals)
2. Calculate priority vectors (normalized eigenvector approach or approximation)
3. In this case, A would have the highest priority as it's rated higher than both B and C
By mastering the AHP methodology and practicing its application, you'll be well-prepared to handle any AHP-related questions on the PMI-PBA exam.
Go Premium
PMI Professional in Business Analysis Preparation Package (2025)
- 3015 Superior-grade PMI Professional in Business Analysis practice questions.
- Accelerated Mastery: Deep dive into critical topics to fast-track your mastery.
- Unlock Effortless PMI-PBA preparation: 5 full exams.
- 100% Satisfaction Guaranteed: Full refund with no questions if unsatisfied.
- Bonus: If you upgrade now you get upgraded access to all courses
- Risk-Free Decision: Start with a 7-day free trial - get premium features at no cost!