Pert - A Three Point Estimation Technique

The PERT Three Point Estimate technique is a type of three point estimate. It can be applied to cost and duration.  The only difference between pert and three point estimation is that it applies weighting so that the most-likely estimate is weighted 4 times more than the other two estimates (optimistic and pessimistic). 

When to use:        

For projects which are unique, such as R&D projects where there are many unknowns. 

Estimate:

E (Pert) = (O + 4M + P) / 6

E (Three Point Estimation) = (O + M + P) / 3

E is Total Estimate

O = optimistic estimate

P = pessimistic estimate

M = most likely estimate

Standard Deviation

SD (Pert) = (P − O)/6

SD is Standard Deviation

Steps to produce PERT estimate:

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

Now E and SD values are used to get the 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