HKSM
Probability Trees
A visual diagram that lays out possible events as branches, with each outcome shown on its own limb and labeled with its likelihood. These probabilities can be combined with impacts along each path to estimate the overall effect if risks occur on the project.
Key Points
- Shows events and their alternative outcomes as branching paths.
- Each branch is annotated with the probability of that outcome.
- Enables calculation of expected impact (e.g., EMV) by multiplying probabilities and impacts along paths and summing results.
- Useful for sequential or conditional risks and for comparing alternative decisions.
Example
A project faces a supplier delay risk (30% chance) that would cost $50,000. If the delay occurs, there is a 40% chance of additional rework costing $20,000. A probability tree shows: branch 1 (no delay, 70%, $0), branch 2a (delay only, 30% x 60% = 18%, $50,000), branch 2b (delay + rework, 30% x 40% = 12%, $70,000). Expected impact = (0.18 x 50,000) + (0.12 x 70,000) = $9,000 + $8,400 = $17,400.
PMP Example Question
Which risk analysis tool maps possible outcomes as branches, assigns a probability to each branch, and allows you to compute the overall expected impact?
- Probability trees
- Risk register
- Monte Carlo simulation
- RACI matrix
Correct Answer: A — Probability trees
Explanation: Probability trees depict outcomes as branches with probabilities, enabling calculation of expected impact across paths. The risk register documents risks; Monte Carlo simulates distributions; a RACI matrix defines roles.
