Palisade’s PrecisionTree is used help decision makers choose between multiple options and take account of cost and rewards of different options, such as choosing the highest versus the lowest bid. It allows you to visually map out, organize, and analyze decisions using decision trees, right in Microsoft Excel.
This analysis is outlined in a piece from Cost Engineering Magazine, entitled “Use Decision Trees to Make Important Project Decisions” by Dr. David T. Hulett. The article “forms the foundation of a new AACE International Recommended Practice,” and examines two different approaches to making a decision: maximize expected monetary value, which is a hallmark of a risk-neutral organization, or, maximize expected utility, which is the appropriate measure of merit for a risk-averse or even a risk-seeking organization. Both approaches benefit from the use of decision trees, as well as optimization and Monte Carlo simulation, to better select and represent alternative outcomes.
