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 do."

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.

Decision Precision^®

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.