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How To Do 3-point Estimating

It is worth learning how to do 3-point  estimating as it is by far the best technique for developing estimates with your project team members. It is called three-point estimating because the team member provides their pessimistic, optimistic and best guess estimates for their deliverable. PERT stands for Program Evaluation and Review Technique. This estimating technique is a best practice because it gives project managers three benefits:

  1. Increased accuracy over one-point estimates
  2. Better commitment from the project team members because the estimate considers the risk in the assignment
  3. Useful information on the risks of each tasks.

3-point (PERT) Estimation is a Three-Step Process

1. We work with the team member assigned to each task to identify both the positive and negative risks involved in their task. Negative risks are the things that could make it take longer and the positive risks are the things that could make it take less time.

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 amount of work the task might take if the negative factors we identified do occur. Last, we ask for an optimistic (O) estimate, which is the amount of work the task might take if the positive risks we identified do occur.

3. We do some simple mathematics with the three estimates. We calculate the mean and standard deviation using the three-point (PERT) estimation formulas: (O + 4BG + P) ÷ 6= the weighted mean and P-O/6 = the standard deviation (used for calculating probabilities). The weighted mean estimate from the three estimates the team member gave us is the one we use for their task. It reflects the amount of risk in the task and 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. They know from experience that the project manager will probably cut it arbitrarily. That’s clearly not the way to get good estimates.

When we use the 3-point (PERT) estimating technique, we record all three estimates in the work package as well as the positive and negative risks that we identified. 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 removes some of the team members’ uncertainty (and often fear) that is associated with the estimating process.

How to do 3-point Estimating Summary & Video

The 3-point (PERT) estimation technique gives us better 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 us the opportunity to take corrective actions before we start work. That increases the likelihood of the good risks and decreases the likelihood of the bad risks.