Integrated Decision-making Approach to Solve Owner Estimate Overdue Problem in Services Procurement Activity

Abstract

Abstract—Owner Estimate (OE) is used in procurement activity to serve as a benchmark for evaluating the bidder’s offer. OE failure to meet the target completion time becomes a common occurrence. The potential impact for an LNG plant is a loss of approximately USD 402 thousand from the gas losses due to the train trip. The research objectives are to identify possible causes of OE overdue problems, analyze and choose the best solution to improve internal effectiveness, and conduct the procurement process. This research also aims to demonstrate an integrated decision-making approach using a combination of methods. The criteria and alternatives solution is generated using Value-Focused Thinking (VFT), the combination of Best-Worst Method (BWM) Hierarchy Process (AHP) is used in conjunction to select the most appropriate solution, and Discrete-Event Simulation (DES) is performed to devise evidence-based implementation scenarios. The root causes of the OE problem are the expired software license and insufficient manning quantity. Implementation scenarios are obtained depending on the number of purchase requisitions. From this research, the integrated decision-making approach is proven to effectively solve the problem in developing a solution that is easy to implement by the decision-makers and improves procurement activity as a whole.

Keyword:Analytic hierarchy process, best-worst method, discrete-event simulation, kepner-tregoe, multi-criteria decision-making, sensitivity analysis