Calculate Expected Monetary Value for multiple decision options. Visualize the decision tree, compare net EMV, and get PMP exam tips.
Recommended Decision
Build New Product
Highest Net EMV: $48,000
EMV
$98,000
Sum(P x V)
Cost
$50,000
Net EMV
$48,000
EMV - Cost
EMV
$50,000
Sum(P x V)
Cost
$10,000
Net EMV
$40,000
EMV - Cost
Sum of (Probability x Value) for each outcomeThe weighted average of all possible outcomesEMV - Decision CostThe expected return after accounting for the upfront costChoose the option with the highest Net EMVMaximizes expected return across all scenariosDecision tree analysis is a quantitative risk analysis technique covered in the PMP exam. It helps project managers evaluate multiple decision alternatives when outcomes are uncertain.
Key exam concepts:
Exam tip: Watch for questions that give you a decision tree scenario and ask which option to choose. Calculate the EMV for each branch, subtract the cost, and pick the highest net EMV. Do not pick the option with the highest individual outcome - that ignores probability.
EMV is a quantitative risk analysis technique that calculates the weighted average outcome across possible scenarios based on probability and impact. It produces a single dollar value that represents the risk-adjusted expected result.
For each scenario, multiply probability by impact. Sum the results across all scenarios. Positive values are expected gains; negative values are expected losses. Net EMV combines both threats and opportunities.
Yes. Opportunities are entered as positive impacts; threats as negative impacts. The net EMV reflects the combined effect of both.
Use a decision tree when comparing multiple options where each has uncertain outcomes. The option with the highest net EMV is the economically optimal choice, before factoring in qualitative considerations.
Expect a handful of Process-domain questions on EMV calculation, decision tree interpretation, and choosing the best option from a comparison of expected values.