 # A Three-Point Estimating Technique: PERT

The Program Evaluation and Review Technique (PERT) is used to find the estimated time for activities to be completed when there are many unknown factors. With origins in the US Navy, PERT has been in use for over 60 years, speaking to the value it brings to project managers. The Project Management Institute (PMI)’s Project Management Professional (PMP®) certification exam may include questions referencing PERT, which is a three-point estimating technique used by project managers across industries to estimate activity duration or cost.

## The Three Points of Three-Point Estimating (PERT)

The PMI’s A Guide to Project Management Body of Knowledge (PMBOK® Guide) – Sixth Edition, provides this definition for the three-point estimating technique:

Note within the PMBOK® Guide’s definition, there are multiple types of three-point estimating tools. The Program Evaluation and Review Technique (PERT), informally known as “PERT PMP,” is one type.

Consider this example from a common situation outside of a business environment. Three estimates are received for painting a house exterior. Calculating the average of the three cost estimates of the same effort provides insight into approximately what the final cost should be. Also, finding the average of the three expected durations of the work effort will provide insight into how long the project should take. Analysis using a three-point estimate provides insight into the expected cost and duration for the planned work.

## Understanding PERT for Projects: Three-Point Estimating PMP

PERT has been used across the globe, in many industries, and for decades. PERT has become the most used and popular method of choice among project managers due to its reliability and accuracy.

The PMBOK® Guide online lexicon provides this definition for PERT:

Note the PMBOK® Guide definition is not “PERT PMP,” nor “PERT Analysis PMP,” as those are not the formal names for the technique. As for when in a project to use PERT analysis to determine a schedule or cost estimate, it is best during planning and implementation. Key points about PERT include:

• PERT is used to estimate project duration or cost.
• PERT is a “weighted” average estimate technique.
• PERT is best used for planning to ensure accurate scope.
• PERT formula is an approximation of the Beta Distribution equation.
• PERT is determined using three points: Optimistic (O), Most Likely (M), and Pessimistic (P).
• PERT combines probability theory and statistics to derive a formula for the average activity from the three-point estimates.
• PERT estimate formula is: (O + 4M +P) / 6

When studying PERT as part of preparing to take the PMP® exam, it is important to know it is one type of three-point estimating, what it can be used to estimate (duration or cost), and when in the project to use it.

## Optimistic Estimate

The “Optimistic estimate” is one value within the PERT formula and is represented as “O.”

The Optimistic Estimate is the “best-case” and thus shortest duration, or lowest cost, to complete the work.

## Pessimistic Estimate

The “Pessimistic estimate” is used in the PERT formula and is represented as “P.”

It is the opposite of the Optimistic estimate in concept. The Pessimistic Estimate is the “worst-case” and thus longest duration, or highest cost, to complete the work.

## Most Likely Estimate

The third value in the PERT formula is the Most Likely estimate and is represented as “M.”

The name is accurate in the estimate is based on changes, but ones that have been planned for and can be mitigated. The Most Likely estimate captures the highest likelihood of completing the work in the given duration or cost.

## Program Analysis Review Technique (PERT) Formula

The three points O, P, and M are used in the Program Analysis Review Technique (PERT) formula. It uses a weighted average (not a simple average) to determine the mean of the three estimated values.

The M value, Most Likely, is given 4 weights as the PERT formula is based on probability theory and statistics, specifically Beta Distribution. More weight is given to the most likely (after all, it is the most likely). If plotted against a chart, this beta distribution will result in a more uniform, bell-shaped curve, called a normal distribution.

## PERT Example

Within a large city, some factors influence how long it takes to drive from home to the office. The weather, the time of day, and any vehicle accidents on the road can impact the duration to get from home to the office on those roads.

The weighted average of the three estimates is used in the PERT formula:

• PERT = (30 + [4 x 60] + 120) / 6
• PERT = 420 / 6
• PERT = 70 minutes

Staying with this example, consider if asked “how long does it take you to drive to work?”. Have you ever replied with “well, if it is a weekday at 8 am, it usually takes me 30 minutes longer than if it is a sunny weekend afternoon.” You are giving different estimates reflecting different situations for the same activity. Using PERT analysis, the estimates go from “guesses” to mathematically verified estimates.

## Pros and Cons of Three-Point Estimating using PERT

Program Evaluation Review Technique (PERT) is a project management planning tool used to calculate the amount of time it will take to realistically finish a project. PERT charts are used to plan tasks within a project — making it easier to schedule and coordinate team members. The Small Business Chronicle article What Are the Pros & Cons of PERT Charts? provides a breakdown of the advantages and disadvantages of the tool, summarized below:

## PERT and the PMP® Certification Exam

PERT analysis PMP exam questions may include the need to calculate estimates using the formula or interpretation of graphed or charted data. Elements within a question can indicate if Beta Distribution using PERT is the best tool, e.g., experts are available, and the project is similar to other projects. Overall, in studying PERT PMP exam questions, be prepared to use the formula, do a basic analysis of a PERT estimate, and know when PERT is most effectively used.

## Example PERT PMP® Exam Questions

Studying for the PMP Exam?

## Conclusion – Three Point Estimating

The Program Analysis Review Technique, or as some refer to it, the “PERT Analysis PMP,” has remained a project manager mainstay because of the power to provide duration and cost estimates in situations with limited data. The time and resources needed to conduct a PERT analysis in the planning stages can be prohibitive but balanced out by the benefit of accurate estimates for the minimum needed to complete a project. Leveraging the three-point estimate technique, the PERT tool is a proven and practical estimating tool for communicating the activity needs and work of a project. 