Completing a Decision Tree

As the project manager of the new GFB Project, you have to decide whether to create a new Web application in-house or send the project out to a developer. The developer you would use (if you were to outsource the work) quotes the project cost at $175,000. Based on previous work with this company, you are 85 percent certain they will finish the work on time.

Your in-house development team quotes the cost of the work as $165,000. Again, based on previous experience with your in-house developers, you feel 75 percent certain they can complete the work on time. Now let's apply what we know to a decision tree:

• Buy or build is simply the decision name.

• The cost of the decision if you "buy" the work outside of your company is $175,000. If you build the software in-house, the cost is $165,000.

• Based on your probability of completion by a given date, you apply the 85-percent certainty to the "strong" finish for the buy branch of the tree. Because you're 85 percent certain, you're also 15 percent uncertain; this value is assigned to the "weak" value on the buy branch. You complete the same process for the build branch of the tree.

Figure 11-7

Decision trees analyze the probability of events and calculate decision values.

Figure 11-7

Decision trees analyze the probability of events and calculate decision values.

• The value of the decision is the percentage of strong and weak applied to each branch of the tree.

• The best decision is based solely on the largest value of all possible decisions.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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