Portillo, Inc. is a manufacturer of small household appliances and cooking utensils. Working with Johanna Portillo, the CEO of the firm, her executive team has developed a scoring model to analyze and select new items to be added to the product line. The model is also used to select old items to be dropped from the line. It employs both objective and subjective estimates of scores for the financial and nonfinancial elements that make up the model. The model is used by a Drop/Add Committee she appointed.
Ms. Portillo is pleased with the construct of the model and feels that it includes all of the factors relevant to the drop/add decision. She is also comfortable with the factor weights developed by her executives. Following a review of the past year’s meetings of the Drop/Add Committee, Ms. Portillo discovered that several managers made significant errors when estimating costs and benefits of many projects. After a careful study of the estimates, she noticed that the sponsors of a product seemed to overestimate its benefits and underestimate its costs. It also appeared that other managers might be underestimating benefits and overestimating costs. She was not sure about her suspicions and wondered how to find out if her notions were correct. Even if they were correct, she wondered what to do about it.
How can Ms. Portillo find out if her suspicions are correct? What are her options if her idea is supported?