Decision Tree Analysis

A decision tree analysis is a specific technique in which a diagram (in this case referred to as a decision tree) is used for the purposes of assisting the project leader and the project team in making a difficult decision. The decision tree is a diagram that presents the decision under consideration and, along different branches, the implications that may arise from choosing one path or another. The decision tree analysis is often conducted when a number of future outcomes of scenarios remains uncertain, and is a form of brainstorming which, when decision making, can help to assure all factors are given proper consideration. The decision tree analysis takes into account a number of factors including probabilities, costs, and rewards of each event and decision to be made in the future. The analysis also uses expected monetary value analysis to assist in determining the relative value of each alternate action.

This term is defined in the 3rd and the 4th edition of the PMBOK.

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