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PERT Three Point Estimate Technique

The PERT Three Point Estimate technique is a type of three point estimate.  The only difference is that it applies weighting so that the most-likely estimate is weighted 4 times more than the other two estimates (optimistic and pessimistic). This formula is most valuable in estimating time or cost of activities for projects that are especially unique, such as in research and development where there are many unknowns.  For projects that are similar to previous projects and there is good historical data and expert experience, the formula is less useful because you could use other techniques like analogous estimating (based on previous experience and projects).

Pert Estimate

E = (o + 4m + p) / 6

where E is Estimate; o = optimistic estimate; p = pessimistic estimate; m = most likely estimate

Standard Deviation

SD = (p − o)/6

where SD is Standard Deviation; p = pessimistic estimate; o = optimistic estimate

To produce a PERT three point estimate:

  1. Decompose the project into a list of estimable tasks, i.e. identify tasks for each Work Breakdown Structure (WBS) work package
  2. Estimate the E value and SD for each task.
  3. Calculate the E value for the total project work as E (Project Work) = Σ E (Task)
  4. Calculate the SD value for the total project work as SD (Project Work) = √Σ SD (Task) 2

The E and SD values are then used to convert the project estimates to confidence levels as follows:

  1. Confidence level in E value +/- SD is approximately 68%
  2. Confidence level in E value +/- 1.645 × SD is approximately 90%
  3. Confidence level in E value +/- 2 × SD is approximately 95%
  4. Confidence level in E value +/- 3 × SD is approximately 99.7%
  5. Information Systems typically use the 95% confidence level, i.e. E Value + 1.645 × SD, for all project and task estimates.[2]

PERT Three Point Estimate Example:

For Activity A:

  • o = 4 hours
  • p = 16 hours
  • m = 8 hours

Using the estimates above for Activity A, calculate the Estimate:

  1. E = (4 + 4(8) + 16) / 6
  2. E = 52 / 6
  3. E = 8.7 hours

Using the estimates above for Activity A, calculate the Standard Deviation:

  1. SD = (16 – 4) / 6
  2. SD =  12 / 6
  3. SD = 2 hours

PERT Three Point Estimate Results for Activity A: 

  1. 6.5h – 10.5h hours:            Confidence level in E value +/- SD is approximately 68.2%
  2. 5.4h – 12h:                      Confidence level in E value +/- 1.645 × SD is approximately 90%
  3. 4.7h – 12.7h:                    Confidence level in E value +/- 2 × SD is approximately 95%
  4. 2.7h – 14.7h:                      Confidence level in E value +/- 3 × SD is approximately 99.7%
  5. Information Systems typically use the 90% confidence level, i.e. E Value + 1.645 × SD, for all project and task estimates.

PERT Three Point Estimation References:

PERT Three Point Estimation Tools

 

 

PERT Three Point Estimation Technique, 4.6 out of 5 based on 14 ratings

11 Responses to PERT Three Point Estimation Technique

  1. good article i loved it..

  2. Thomas says:

    Discrepancy
    Formula:’…Information Systems typically use the 95% confidence level…’
    Example:’…Information Systems typically use the 90% confidence level…’
    Confused

  3. Rindert says:

    There seems to be an error in the calculation above: 52/66,5.

  4. Dodger says:

    2. E = 52 / 6
    3. E = 6.5 Hours

    Huh? 52/6 = 8.667 not 6.5

  5. My Homepage says:

    … [Trackback]

    [...] Informations on that Topic: pmdocuments.com/2012/09/17/pert-three-point-estimation-technique/ [...]

  6. amit arora says:

    I like reading this article , informative article……

  7. Ram says:

    Thanks Very Useful Formula

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