07 October 2021 at 04:57AM
PMI Honolulu Member Kenneth Smith's article gets published in PM World Journal October 2021 Issue
Decision Trees, EMV and THEE
By Dr. Kenneth Smith, PMP
In my previous two PMWJ Advisory articles, Benefit/Cost analysis was presented as a systematic technique to determine whether a particular approach was worth the monetary cost in terms of a Benefit/Cost Ratio; whereas Cost:Effectiveness analysis was for comparing the relative benefit of two or more options in terms of subjective effectiveness, where either or both the benefit and the cost were in non-monetary terms. Decision Tree analysis is another useful quantitative Planning Phase technique in the Benefit-Cost-Effectiveness trilogy in project situations where several alternatives – i.e. not just Plan A, but also Plans B, C, D, E or whatever – are under consideration (and in contention) to achieve a particular objective, and:
- Both benefits and costs are monetary, and the
- Benefit/Cost Ratio is in terms of Expected Monetary Value (EMV).
For more information contact Dr. Kenneth Smith