Decision tree
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DECISION TREE
Project Risk Management: A combined Analytic
Hierarchy Process and Decision Tree Approach
Dr.Prasanta Kumar Dey
CONTENT
What is the decision tree?
The example of decision tree
The advantage of decision tree
The application of decision tree
WHAT IS THE DECISION TREE?
Decision tree is a decision support tool that uses
a tree-like graph or model of decisions and their
possible consequences, including chance event
outcomes, resource costs, and utility.
Decision tree is commonly used in operations
research, specifically in decision analysis, to help
identify a strategy most likely to reach a goal.
Another use of decision trees is as a descriptive
means for calculating conditional probabilities.
THE EXAMPLE OF DECISION TREE
THE ADVANTAGE OF DECISION TREE
Are simple to understand and interpret.
Have value even with little hard data.
Use a white box model.
Can be combined with other decision techniques.
Project Risk Management: A combined
Analytic Hierarchy Process and Decision
Tree Approach
Dr.Prasanta Kumar Dey
CONVENTIONAL PROJECT MANAGEMENT MODEL
PROPOSED PROJECT MODEL
RISK MANAGEMENT PROCESS
Risk identification
Risk analysis
Risk response
RISK MANAGEMENT FLOW
METHODOLOGY
Identifying the work packages for risk analysis.
Identifying the factors that affect the time, cost, and
quality achievement of a specific work package.
Analysis the effect and determining severity of failure
Driving various alternatives responses for mitigating
the effect of risk factors.
Estimating cost for each alternative
Determining the probability and severity of failure of
a specific work package
Forming a decision tree.
Deriving expected monetary value or the cost of risk
response in this case.
Selecting the best option statistical analysis.
IDENTIFICATION OF WORK PACKAGES
Riving crossing
Pipeline laying
Stations construction
Telecommunication and SCADA system
WORK BREAKDOWN STRUCTURE
AHP MODEL FOR DETERMINING RISKING OF PROJECT
IDENTIFICATION OF RISK FACTORS
Technical Risk
scope change
technology selections
implementation methodology selection
Equipment risk
materials risk
Engineering and design change
Acts of God
normal natural calamities
abnormal natural calamities
Financial, Economical and Political Risk
inflation risk
fund risk
changes of local law
changes in government policy
improper estimation
Organization Risk
capability risk of owner’s project group
contractors failure
vendor’s failure
consultant’s failure
Statutory Clearance Risk
environmental clearance
land acquisition
clearance from chief controller of explosives
other clearance from government authorities
LIKELIHOOD OF RISK IN A PROJECT
PROBABILITY AND SEVERITY OF RISK FACTORS
DECISION ALTERNATIVES
do nothing
carrying out detailed survey
using superior technology
engaging an expert project team
taking all responses
THE COST DATA FOR EACH PACKAGE AGAINST
VARIOUS RESPONSES
DECISION TREE FOR PIPELINE LAYING WORK PACKAGE
DECISION TREE FOR RIVER CROSSING WORK PACKAGE
DECISION TREE FOR STATION CONSTRUCTION WORK PACKAGE
DECISION TREE FOR TELECOMMUNICATION AND CATHODIC
PROTECTION WORK PACKAGE
THE EMV FOR “ PIPELINE LAYING PROJECT”
THE EMV FOR” PIPELINE LAYING ACROSS RIVER”
THE EMV FOR ” STATION CONSTRUCTION”
THE EMV FOR “TELECOMMUNTION AND SCADA SYSTEM
THE DECISION EMERGE
RISK RESPONSES
To avoid
To reduce
To transfer
To absorb
CONCLUSION
Risk management using a combined AHP and
DTA provides an effective means for managing a
complex project efficiently.
Risk management makes an effect to quantify
risk by modeling its probability and severity in
line with the perceptions of experienced project
executives subjectivity.
REFERENCE
http://en.wikipedia.org/wiki/Decision_tree
http://www.mindtools.com/dectree.html
http://zh.wikipedia.org/zhhk/%E5%86%B3%E7%AD%96%E6%A0%91