thinQmaster Virtual testing partner Adaptive practice exams that find your weak spots and drill them. Every answer explained. From $69
Enroll

thinQmaster

Find your exam

Five questions free, before you decide.

Step 1 · choose a vendor

In one of our camps? Your practice exams come with the tuition — they are on your study page already.

Project Management & Agile · Advanced

Decision Tree Analysis

Diagramming and calculation technique for evaluating alternative choices under uncertainty using expected monetary value.

Definition

Decision nodes (squares) branch into options, and chance nodes (circles) branch into probabilistic outcomes. The option with the best net EMV, after subtracting investment cost, is selected.

Example

Build in-house ($200k, 40% chance of $100k overrun) vs. buy ($260k fixed): EMV in-house is $240k, so build.

Exam tip

Remember to include the cost of each decision path, then choose the best expected value.

Related terms