## 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:**

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

- Confidence level in E value +/- SD is approximately 68%
- Confidence level in E value +/- 1.645 × SD is approximately 90%
- Confidence level in E value +/- 2 × SD is approximately 95%
- Confidence level in E value +/- 3 × SD is approximately 99.7%
- 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:**

- E = (4 + 4(8) + 16) / 6
- E = 52 / 6
**E = 8.7 hours**

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

- SD = (16 – 4) / 6
- SD = 12 / 6
**SD = 2 hours**

**PERT Three Point Estimate Results for Activity A: **

- 6.5h – 10.5h hours: Confidence level in E value +/- SD is approximately 68.2%
- 5.4h – 12h: Confidence level in E value +/- 1.645 × SD is approximately 90%
- 4.7h – 12.7h: Confidence level in E value +/- 2 × SD is approximately 95%
- 2.7h – 14.7h: Confidence level in E value +/- 3 × SD is approximately 99.7%
- 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

good article i loved it..

Thanks.

Discrepancy

Formula:’…Information Systems typically use the 95% confidence level…’

Example:’…Information Systems typically use the 90% confidence level…’

Confused

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

Yes. Thanks. I fixed it.

2. E = 52 / 6

3. E = 6.5 Hours

Huh? 52/6 = 8.667 not 6.5

Thanks for finding the error. I corrected it.

Hassib

I like reading this article , informative article……

Thanks Amit.

Thanks Very Useful Formula

E = 8.7 hours

SD = 2 hours

1.6.5h – 10.5h hours: Confidence level in E value +/- SD is approximately 68.2%

???

Shouldn’t this be 6.7-10.7 hours??

Good catch. I will update the numbers today. Thanks!

Two of your point 5’s don’t match, one says 95% and one says 90%. The formula used for both matches the 90% certainty, so both should say 90%, right?

In the theory section:

5. Information Systems typically use the 95% confidence level, i.e. E Value + 1.645 × SD, for all project and task estimates.[2]

And in the simple example section:

5. Information Systems typically use the 90% confidence level, i.e. E Value + 1.645 × SD, for all project and task estimates.

Thanks. Will take a look and update.

Hassib

Good point. Here is a good reference to the difference between PERT and triangular estimation for those not familiar with the distinction: http://www.leaderhelper.com/pdf-files/06a-TriangularVsPERT-FTPA.pdf

– Hassib

Heya – Newbie PM here – can you tell me why 4, specifically, is used to weight the calculation?

Thanks!

So, the simple answer is that this provides a weighted average where the most likely is weighted four times more likely than the optimistic and pessimistic. This is used for Monte Carlo simulations and is an accepted weight standard. But you don’t have to use a weighted standard. You could use a triangular standard if you wish. E = (o + m + p)/3.

See this link as a starting point for further research: https://en.wikipedia.org/wiki/Three-point_estimation

The two artifact (reference) links – Nebraska I.T. and Lewis institute – need to be replaced. Otherwise, thanks – good stuff.