Decision Analysis Process
Decision analysis is the discipline that helps
decision makers choose wisely under uncertainty.
"Decision analysis is what you do when you don't know what to
Three features characterize the formal DA process:
- The organization has a quantified way of measuring value
or progress toward the organization's objective. In business, the most common
measure is present value of future net cashflows.
- Judgments about risks and uncertainties are expressed as probabilities
and probability distributions.
- The expected value calculation condenses a range of
possibilities into a single number. The usual decision policy
is to choose the alternative having the best expected value.
The principal tools for expected value calculations are decision
tree analysis and Monte Carlo simulation.
Training and assistance by John Schuyler,
CAM CMA CMC CPIM PE PMP, Aurora & Denver, Colorado, USA
Risk and Decision Analysis in Projects,
2nd edition, by
John Schuyler, 2001, Project Management Institute
Copyright © 2005-2008 by John R. Schuyler. All rights reserved.