Model Building and Decision-Making

Emphasis upon value for money and accountability have placed greater pressure upon public sector managers at all levels to improve decision-making, make better use of tighter resources and justify decisions made, particularly in the context of increased scrutiny from both internal and external auditing processes. However, as in the private sector, the value of model building is often not appreciated by operational managers, its use being mostly confined to specialists or specialist departments. This reflects a common view that model building is highly mathematical, and a natural aversion amongst managers to using equations and symbols, together with the assumption that they do not possess the requisite mathematical skills. Yet such models can greatly simplify, rather than complicate, the decision-making process by leading to speedier and improved decisions which can be rationally defended. Moreover, these methods can be used by those with little mathematical knowledge, especially where suitable computer hardware and software facilities are available. This chapter, which is aimed at the non-specialist, explains the role and nature of the model building approach to decision-making, and demonstrates its application by reference to some simple examples drawn from the public sector.