When it comes to projects, you’re likely to encounter problems that must be solved. Thankfully, the best project management software platforms have tools to help project leaders create decision trees that can expedite and simplify decision-making processes. But what is decision tree analysis? Read on to learn how the process works and how to best use it for project success.
Below, we’ll explain what decision tree analysis is and highlight the four types of decision trees. We’ll also discuss decision tree nodes and their usage, and we’ll outline the five steps for using a decision tree. Finally, we’ll share an example of a decision tree. We know you’re ready to learn, so let’s get started.
What Is Decision Tree Analysis?
Decision tree analysis is the process of creating visual documents that outline the potential outcomes of decisions. Mind maps can show the impact of project decisions on costs, project goals, deadlines, risks, constraints and more.
to create a decision tree diagram.
Many project management methodologies champion the use of decision trees. However, these tools are mainly found in traditional methodologies like Critical Chain Project Management, which follows the principles and guidelines of the Theory of Constraints.
Decision Tree Types
In total, you will produce or encounter four different types of decision trees during your project management career. The four types of classification trees include the Current Reality Tree, the Evaporating Cloud Tree, the Future Reality Tree, and the Strategy and Tactics Tree. Our table below will help explain the differences between the trees.
| Tree Type | Usage | Description |
|---|---|---|
| Current Reality Tree (CRT) | The CRT maps out current project processes and constraints. | The CRT helps project leaders identify broken or underperforming processes, along with their root causes. |
| Evaporating Cloud Tree (ECT) | The ECT is used to visualize constraints that have no solution. | The ECT allows project managers to identify changes that can erase constraints. |
| Future Reality Tree (FRT) | The FRT maps out what future processes could look like. | The FRT shows possible outcomes when ideas from the ECT are implemented. |
| Strategy & Tactics Tree (STT) | The STT enables project leaders to plot and visualize a plan of action. | The STT lists the necessary steps to implement changes, eliminate constraints and enhance processes. |
Decision Tree Symbols
Every decision tree uses the symbols listed below. They also include notes that describe potential outcomes or decisions, along with numerical data that can explain project finances. Here are the decision tree symbols you need to monitor closely.
- Alternative branches: Maps can show two branches that extend from one decision on the tree. Each branch will display a potential outcome or decision.
- Chance nodes: These circular nodes indicate that a decision could have multiple or uncertain outcomes.
- Decision nodes: A square node on your tree represents a decision that was made. All decision trees start with one square decision node.
- End nodes: As the name suggests, end nodes are triangles that show the outcome.
Why Use a Decision Tree in Project Management?
Project leaders use decision trees to visualize complex problems that occur during the end-to-end project management cycle. Decision trees can help resolve issues relating to product quality, constraints, project finances, operations and more.
For example, if your project risks missing its due date or is experiencing scope creep, you can develop decision trees to list decisions or scenarios that could accelerate progress or prevent budget overruns. If you need to visualize a decision-making process to help your project reach expected outcomes, then decision trees are for you.
What Are the Steps in Decision Tree Analysis?
The five steps in decision tree analysis are as follows:
- Start with an idea
- Add decision tree nodes
- Reach the endpoint
- Calculate expected values
- Evaluate the outcome
No matter which of the four decision trees you choose, we recommend following these steps to ensure that the analysis leads to the ideal solution.
Below, we’ll cover the five steps in more detail so you can better understand each one and its role in the decision-making process.
Decision Tree Analysis Advantages and Disadvantages
As with many tools, decision trees offer many advantages that can improve your approach to solving problems. However, you must also understand the disadvantages that can significantly impact how your project runs. We’ll explore a few advantages and disadvantages below.
Advantages
- Transparent communication: Decision trees enable project teams to make their decision-making transparent.
- Easy creation and maintenance: Decision trees can be created quickly using many of the best free project management software options. If you need project management software but aren’t sure which platform to use, our ClickUp vs monday.com guide will help steer you in the right direction.
- Enhanced flexibility: Few documents are as flexible as decision trees. Team members can use them to quickly update diagrams.
Disadvantages
- Complexity: Complexity can become an issue if project leaders add too many decisions or possible outcomes to a tree.
- Scope creep: Decision trees can cause problems if project leaders don’t use up-to-date data and financial values. Using outdated data can lead to scope creep.
- Risk management: Project leaders must update the project’s risk management plan to reflect changes made due to the decision tree. Failure to do so could lead to devastating outcomes.
Decision Tree Example
Now that you understand decision trees and their nodes, it’s time to look at a simple decision tree example. In this scenario, a company wants to make a decision about software.
The decision tree shows two possible routes from the decision node: build new software or update existing software. These routes use alternative branches to explore different options for the company, such as building internally or hiring an external firm to either create or update the software. Each option leads to an endpoint node that lists potential costs and timelines.
Once a decision tree is created, the project team, the key stakeholders and the client will analyze the options and decide which course to take. Of course, this is just a simple example; the decision trees you may encounter in the real world can be much more complex. Still, this example clearly demonstrates what a decision tree will look like.
Final Thoughts
If you’re in a bind and need to figure out a plan of action quickly, it might be time to turn to decision trees. These versatile tools can help you manage project finances, find the root cause of an issue and figure out logical steps to fix the problem. Decision trees are easy to make and maintain, and they can be shared with others quickly.
Do you use decision trees when managing a project? What project management software do you use to help you track and solve problems? Do you have any decision tree advice you’d like to share? Let us know in the comments. Thanks for reading.
FAQ: Decision Tree
-
The five steps of decision tree analysis are to start with an idea, add decision tree nodes, reach the endpoint, calculate expected values and evaluate the outcome.
-
There are only five steps in decision tree analysis: starting with an idea, adding decision tree nodes, reaching the endpoint, calculating the expected value and evaluating the final outcome.
-
To interpret the outcome of a decision tree, follow the path from the original decision tree node and take the route that leads to the outcome that will satisfy your company, the key stakeholders and the client.
-
The purpose of a decision tree is to help project leaders identify and solve problems that occur during a project.
The post What Is Decision Tree Analysis? Steps and Examples in 2024 appeared first on Cloudwards.
