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# Part 69: Three-Point Estimating

//Part 69: Three-Point Estimating
Part 69: Three-Point Estimating2022-09-04T19:40:23+00:00

Part 69: Three-Point Estimating
(Project Schedule Management: Estimate Activity Durations)
(Project Cost Management: Estimate Costs)

• Three-Point Estimating is used to estimate duration and cost
• For duration
• Three-Point Estimating improves activity duration estimates by considering estimation uncertainty and risk
• Developed with the Program Evaluation and Review Technique (PERT)
• To use Three-Point Estimating, we calculate three estimates
• MOST LIKELY (tM)
• Typical scenario for the activity
• We base this on the duration of the activity, the amount of resources that are likely to be assigned to the activity & their productivity level, dependencies on other participants, and typical interruptions
• OPTIMISTIC (tO)
• Best-case scenario for the activity
• PESSIMISTIC (tP)
• Worst-case scenario
• The three estimates form a distribution, which results in the estimate, tE
• There are several ways to calculate tE, but the most common ways are
• TRIANGULAR DISTRIBUTION = simple average
tE = (t0 + tM + tP) / 3
• BETA DISTRIBUTION = taken from PERT, where the tM is given the most weight
tE = (t0 + 4tM + tP) / 6
• For costs
• Improves activity cost estimates by considering estimation uncertainty and risk
• Three estimates are used to determine the range for an activity’s costs
• MOST LIKELY (cM) = estimate based on realistic effort for the work and predicted expenses
• OPTIMISTIC (cO) = best-case scenario for the activity
• PESSIMISTIC (cP) = worst-case scenario
• The three estimates form a distribution, which results in the estimate, cE
• Most common ways to calculate cE
• TRIANGULAR DISTRIBUTION = simple average
cE = (c0 + cM + cP) / 3
• BETA DISTRIBUTION = taken from PERT
cE = (c0 + 4cM + cP) / 6