Decision Tree Analysis

Decision Tree Analysis is basically a Tool and Technique in the Perform Quantitative Risk Analysis process. PG-KA mapping below,

Now within this process, we have also talked about the Expected Monetary Value (EMV),

With the help of EMV analysis you will be able to calculate the costs of all the paths you might take during the course of your project.

The calculation of EMV is something that you need to remember before we can talk about Decision Tree Analysis. Basically, Decision Tree Analysis is another way of calculating EMV. It is a quantitative risk analysis and modeling technique.

In the Decision Tree Analysis above, which of the two grey boxes would be the right path to follow? If you were to take a decision for the money going out of the project, it should be the first one since it has a value of $1000 which is any day better than -$400.