3-Point Project Estimating (PERT Estimates)

By Dick Billows, PMP

Far and away the best technique for developing estimates with your project team members is three point estimating (sometimes called PERT). The reason this technique is a best practice is that it gives project managers three benefits:

• Increased accuracy over one point estimates
• Better commitment from the project team members because the estimate considers the risk in the assignment
• The estimating technique gives you some very useful information on the risks of each task that you estimate using this technique

1. We work with the team member who will be assigned to the task to identify both the positive and negative risks involved in the tasks. Negative risks are the things that could make it take longer and the positive risks could cause the task to be completed faster.

2. Then we ask the team member to make three estimates. The first is a best guess (BG) which is the average amount of work the task might take if the team member performed it 100 times. The second estimate is the pessimistic (P) estimate which is the work estimate if the negative factors we identified do occur. Last, we ask for an optimistic (O) estimate which is how much work the task would take if the positive risks occur.

3. The project manager does some simple mathematics with the three estimates calculating the mean and standard deviation using the PERT or 3-point estimating formulas: (O + 4BG + P) ÷ 6=mean and P-O/6 is the standard deviation (used for calculating probabilities). The mean estimate from the 3 estimates the team member gave us is the one we use for the task. It reflects the amount of risk in the task and particularly the severity of the impact of the optimistic and pessimistic risks.

By having this discussion about the risks in the task, we give the team member an opportunity for input into the estimating process. We also go way beyond the game-playing that typically surrounds making an estimate of a single number. Typically team members are thinking about that single number and padding it as much as they possibly can because they know the project manager will probably cut it arbitrarily. That's clearly not the way to get good data.

When we use the 3-point estimating technique, we record all 3 estimates in the work package as well as the positive and negative risks that we identify. We're clearly communicating to our team members and the project sponsor that the estimates are not 100% certain. There are risks we have considered that could affect the amount of time the task will take. That approach by project managers removes some of the team members' uncertainty (and often fear) that's associated with the estimating process.

In sum, using 3-point estimates gives us better estimating data because we're explicitly considering risks. We also learn about the risks of a task early in the process from the person who will be doing the task. That gives the project manager the opportunity to take corrective actions before we start work to increase the likelihood of the good risks and decrease the likelihood of the bad risks.

As an example, if a team member says that on previous assignments involving a certain operating department in the company, the amount of work in the task has been substantially increased because time after time supervisors and managers from that operating department failed to come to meetings. Knowing that, the project manager would take steps to encourage that department to attend the planning meetings and the PM might even involve the project sponsor. If we can reduce the likelihood of negative risks, we take a big step toward improving our project duration.

We teach the 3-point or PERT estimating technique in our individual classes and certification programs.