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Three-Point Estimating Guide

Three-Point Estimating

What is it: Three-Point Estimating is a tool in Project Management used to estimate the cost or duration of an activity in a project. It leverages three different estimates - the Optimistic (O), the Most Likely (M), and the Pessimistic (P) to arrive at E, the expected estimate. The formula used is E = (O + 4M + P) / 6.

Why it is important: Three-Point Estimating reduces the risk of cost and scheduling overruns by providing a more realistic and reliable estimate. It accounts for uncertainties and risks inherent in project activities.

How it works: By considering different possible scenarios (Optimistic, Most Likely, and Pessimistic), Three-Point Estimating helps in making informed decisions and better planning.

Exam Tips: Answering Questions on Three-Point Estimating
Common questions on Three-Point Estimating often revolve around understanding the concept, the formula, and its application. Here are some tips for answering such questions:
1. Understand the basic concept: Be sure about what Three-Point Estimating entails and its relevance.
2. Know the Formula: The formula - E = (O + 4M + P) / 6 is central. Ensure to commit it to memory and know what each value stands for.
3. Application: Practice questions around applying the formula.
4. Read questions carefully: Understand what the question requires before attempting the answer.
5. Time management: Don't spend excessive time on one question. Be mindful of time.

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Three-Point Estimating practice test

Three-point estimating is a cost estimation technique that acknowledges uncertainties in cost estimates by considering three outcome possibilities for each project component: the most likely (M), the optimistic (O), and the pessimistic (P) estimate. These three points can be derived from historical data, expert judgment, or a combination of the two. The technique then calculates a weighted average of these three estimates, typically using the PERT (Program Evaluation and Review Technique) formula, which assigns higher weight to the most likely estimate. The result is a more realistic and risk-adjusted cost estimate that accounts for possible variations in key cost drivers, recognizing that project costs may deviate from initial estimates due to unforeseen events or changing project conditions. Three-point estimating can lead to more accurate and reliable cost forecasts, enhancing project management decision-making and facilitating risk assessments and contingency planning.

Time: 5 minutes   Questions: 5

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  • Earn 35 PDUs needed for your PMP certification
  • 12955 Superior-grade Project Management Professional practice questions.
  • Accelerated Mastery: Deep dive into critical topics to fast-track your mastery.
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  • 100% Satisfaction Guaranteed: Full refund with no questions if unsatisfied.
  • Bonus: If you upgrade now you get upgraded access to all courses
  • Risk-Free Decision: Start with a 7-day free trial - get premium features at no cost!