Quick Definition:
Decision Tree Analysis is a diagramming and calculation technique for evaluating the implications of a chain of multiple options in the presence of uncertainty.
How to Use a Decision Tree
A decision tree uses nodes and branches to model different choices and their potential outcomes. It typically includes:
- Decision Nodes: Represent a choice the PM must make.
- Chance Nodes: Represent an uncertain event (risk).
- Expected Monetary Value (EMV): A calculation of the average outcome of a decision, considering the probability and impact of each branch.
Why Use It?
Decision trees provide a structured way to compare different project strategies and choose the one with the highest expected value or lowest risk.
