How to Use a Decision Tree Analysis in Project Management

7 min readDec 15, 2020


Photo by Yeshi Kangrang

Are you looking for an effective way to organize important project decisions while looking at the bigger picture? If so, we recommend that you be using decision tree analysis for your project management jobs.

Using a decision tree for your project manager will help you to see every possible outcome of the project while helping you to make the best decision for you, the project, and your business. To learn more about decision trees keep reading our guide below.

What’s a Decision Tree?

A decision tree, also known as a decision tree analysis, is a diagram that will help to identify outcomes due to a collection of related choices. In the realm of project management using a decision tree analysis will help to have project leaders compare the different courses of action and evaluate the risks involved with each decision.

When using the decision tree you can also weigh out the probabilities of success and the potential benefits associated with each decision. When it comes to decision tree project management it’s important to note that there are four main elements to a tree.

Decision nodes

A decision node can be represented on a tree as a symbol or shape. This will indicate that a choice must be made.


Thse lines are what connect the nodes together and help the project manager to see possible routes. Each branch on your diagram will represent a choice or decision and should be clearly labeled to keep the tree organized.

Chance nodes

These nodes are usually represented by a symbol on decision trees that doesn’t resemble the symbol used for decision nodes. Chance nodes will represent the end of the decision tree diagram and help to illustrate your final outcome.

Final outcome

Your decision tree analysis will begin with a simple decision node. From here branches will reach out and represent various choices and help to result in potential outcomes. After you have played out the entire scenario, an end node will be used to represent the final outcome.

What Are the Benefits of Using Decision Tree Analysis?

When you’re heading a project, every decision you make will present new opportunities and threats for your business and team. Using the decision tree analysis will help you to better prepare for each outcome and help you to make the best and most informed decisions for your projects.

You will also have more clarity because decision trees are very easy to understand. When you create a decision tree it will also help to show each outcome and how they logically flow together.

Using a decision tree will also make your project more efficient. Since they layout information in a straightforward way, these trees can be analyzed fast and used to make important decisions.

They will even help you to become more adaptable. Decision trees can be easily adapted to include new ideas and opportunities.

Lastly, decision trees are very compatible. When you use a decision tree with other project management methods, it can allow you to complete a project while managing others.

How Do You Use a Decision Tree?

Now that you’re aware of what a decision tree is and how it will benefit your projects let’s talk about how to use one. Keep reading below to see the steps on how to use your own decision tree.

1. Look at Each of Your Options

The first step to using your decision tree is to look at each of your options. Every project you’re on will have multiple routes to complete it, so these should all be mapped out.

You will want to identify each of these routes and add them to your decision tree. From here you can review each path and make wise decisions about each one. After analyzing the pros and cons of each path you’ll be able to decide which path is the best for you and your project.

2. Predict Potential Outcomes

Now that you’ve listed each option for your projects it’s time to really look at the potential outcomes of each option. This isn’t a foolproof step, but you’ll need to make your best predictions, even if they aren’t accurate.

After identifying your options you can add the outcomes to your decision tree to help make it more clear. After thinking about all the outcomes of your decisions it’s time to analyze.

4. Analyze Each Result

At this point in the process, your decision tree should be fully completed. It should have multiple branches coming out of potential outcomes.

Now you’ll need to analyze each result you’ve listed on your tree. You’ll also need to assess which option will be the best fit for you and your company.

When working with money amounts we recommend using the expected value (EV) formula. This value is found by multiplying the potential outcome by the likelihood that it will actually occur. For example, if the project will earn the business $1,000 but there’s a 50 percent chance of success you’ll get an answer of 500, which is your score.

Don’t forget that you’ll also need to run the EV score for your failed outcomes. This will help you to compare them side by side to see what the best option is.

5. Optimize Accordingly

The last step to your decision tree is to optimize your actions accordingly. After reviewing every option you should have a good idea of which option is the best and will provide the greatest chance of success. Using the tree will help you to confidently make decisions when it comes to your project.

What Materials Do You Need for Your Decision Tree?

Making a decision tree is a thorough process, and it will require some materials. First, you’ll need some pen and paper to map out and create your tree. This makes decision trees cost-effective and practical.

You could even use a whiteboard hanging in the office or laying around your house. Using a whiteboard to create your tree will make it easier to fix any mistakes since it’s so forgiving.

You could even use a wall and some sticky notes to create your tree. This may be messy for some but for others, it’s a great way to make a tree and to swap options out.

Software can even be used to make a great decision tree. There are different software options on the market that can be used to create a tree that’s organized and effective. This is a great option for those that want their trees to stay nice and tidy and they want them to be easily shared.

Now It’s Time to Make Your Tree

We have given you an in-depth guide on what a decision tree is, what elements are included, and how to go through the process of making it. So, now it’s your turn to make a decision tree for your project. If you’re having trouble starting your tree, try the 4 step system below.

Step 1: Identify

The first step to creating your decision tree is to identify. You should be identifying each of your options before making an informed decision.

This is what your tree will help with. List all of your decisions on your project path.

Step 2: Forecast

The second step to creating your tree is to forecast. You’ll need to forecast, or predict, every potential outcome for each option you identified in step 1.

The best way to forecast is to ask yourself what you really see happening if you pursue this decision. Make sure to list out the good outcomes as well as the bad. After this step, you will have a diagram that’s a complete decision tree.

Step 3: Analyze

After the time-consuming process of forecasting your outcomes, it’s time to analyze. When completing step 2 you’ll have a completed decision tree which is needed for the analyzing step. If your diagram doesn’t resemble much of a tree we challenge you to brainstorm more options and add them to the diagram.

Now it’s time to analyze every course of action you’ve listed on your tree. You will want to list the positive and negative outcomes that will happen if you take this route.

Step 4: Optimize

After looking at every possible forecast and listing the outcomes it’s time to optimize your decision tree. You will want to make sure you’re optimizing your actions for success.

Look at the end of your tree and pick the outcome that will benefit you, the project, and the company. Now you know which direction you should take the project in.

Now You Know How to Use a Decision Tree

We have provided you with an in-depth guide on decision tree analysis. You now know what decision trees are, their benefits, the elements behind them, and how to create your own. For more project management tips and information be sure to check out the rest of our website here.




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