AACE International

Palisade’s PrecisionTree Software Helps Form New AACE International Recommended Practice

Palisade’s PrecisionTree software was featured prominently in Cost Engineering Magazine’s July/August 2014 issue.  The article “Use Decision Trees to Make Important Project Decisions,” by long-time Palisade software user Dr. David T. Hulett, describes how decision trees can help decision makers choose between multiple options and take account of cost and rewards of different options.

decision tree 1

The article “forms the foundation of a new AACE International Recommended Practice,” and examines two different approaches to making a decision: maximize expected monetary value, which is a hallmark of a risk-neutral organization, or, maximize expected utility, which is the appropriate measure of merit for a risk-averse or even a risk-seeking organization. Both approaches benefit from the use of decision trees, as well as optimization and Monte Carlo simulation, to better select and represent alternative outcomes.

decision tree 2

For anyone interested in incorporating decision trees into their decision making, consider checking out Palisade’s PrecisionTree software; it allows you to visually map out, organize, and analyze decisions using decision trees, right in Microsoft Excel.