Turn Uncertainty Into a Decision Tree
Structure a capital decision tree with decisions, chance events, probabilities, and expected values.
The uncertain path Build now could win the market early, but a regulatory delay could leave a $6M line underused. A path-dependent decision needs nodes, not just a base case. Decision trees Decision -> Chance -> Expected value Separate what management controls from what uncertainty controls, then value each path. Average case One NPV blends all outcomes The sequence becomes visible. Expected value is only useful when the branches reflect the real sequence of uncertainty. 01 Decision 02 Chance 03 Compare Node 1 The team can build now, wait for clearance, or outsource initial volume.
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