A decision tree is a structured diagram showing several possible outcomes of decisions. Acting as a risk assessment and decision-making tool, it helps project managers methodically consider several possibilities.
Key Features:
- Nodes Represent Choices: Each branch represents an alternative decision.
- Probabilities & Costs: Includes potential outcomes, probabilities, and impact analysis.
- Helps in Uncertain Situations: Ideal for complex scenarios where multiple factors influence outcomes.
Illustrative Example:
A corporation choosing whether to make additional software investments consults a decision tree. The pathways weigh predicted efficiency advantages, upfront expenses, and possible hazards. According to the tree, albeit more initial expenses, investing in automation shows a better predicted return.
Why It’s Valuable:
Decision Trees eliminate guesswork and enable structured, data-driven decision-making, reducing risks in project planning.
