PMI Risk Management Professional Practice Exam

What technique is used to evaluate alternative decisions and visualize their outcomes?

1. SWOT analysis

2. Decision tree analysis

3. Cost-benefit analysis

4. Fishbone diagram

The correct answer is: Decision tree analysis

The technique that is best suited for evaluating alternative decisions and visualizing their outcomes is decision tree analysis. This method allows project managers and decision-makers to outline various possible courses of action, along with the potential consequences of each option. Decision trees depict decisions as branches, clearly illustrating the relationship between different choices and their possible outcomes, including risks and rewards. This visual representation enables a straightforward comparison of alternatives, making it easier to analyze various scenarios systematically. The structure facilitates a more informed decision-making process by quantifying the potential impacts and probabilities associated with each decision pathway. In contrast, other options like SWOT analysis focus on identifying strengths, weaknesses, opportunities, and threats related to a project or organization rather than visualizing decision outcomes. Cost-benefit analysis assesses the financial implications of different choices but does not provide a visual framework for comparing multiple decision paths. The fishbone diagram, also known as the cause-and-effect diagram, is used for identifying root causes of problems rather than evaluating decisions. Thus, decision tree analysis stands out as the most effective technique for the specific purpose of evaluating alternative decisions and visualizing their outcomes.