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Three-Point Estimating

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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…

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PMP - Three-Point Estimating Example Questions

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Question 1

Your project includes a task with an optimistic estimate of 20 days, a most likely estimate of 30 days, and a pessimistic estimate of 50 days. What would be the expected time using Three-Point Estimating?

Correct Answer: 32 days

The Three-Point Estimating technique, also known as PERT (Program Evaluation and Review Technique), uses the formula: (Optimistic + 4 * Most Likely + Pessimistic) / 6. In this case, we have: Optimistic = 20 days, Most Likely = 30 days, Pessimistic = 50 days. Plugging these values into the formula: (20 + 4*30 + 50) / 6 = (20 + 120 + 50) / 6 = 190 / 6 = 31.67 days. Rounding to the nearest whole number, we get 32 days. This method provides a weighted average that considers the most likely scenario more heavily while also accounting for best-case and worst-case scenarios, resulting in a more accurate estimate than a simple average.

Question 2

You are observing a construction project where the most probable time to finish a task is 20 days, with optimistic and pessimistic estimates being 15 days and 25 days respectively. Which estimate conveys the median time?

Correct Answer: 20 days

In project management, when using the PERT (Program Evaluation and Review Technique) estimating technique, the most probable time is actually the median time. This is because it is the time that has the highest probability of occurrence and thus represents a mid-point. That's why 20 days, in this case, represents the median time. The other estimates, 15 days (optimistic estimate) and 25 days (pessimistic estimate) represent the range or bounds within which the task is expected to be completed while 22 days doesn't align with any known estimating model.

Question 3

In a Three-Point Estimating scenario, you have a task with an optimistic estimate of 5 days, a most likely estimate of 8 days, and a pessimistic estimate of 14 days. The project sponsor wants an estimate that balances risk and optimism. Which formula should you use?

Correct Answer: (O + 4M + P) / 6

The best formula to use in this Three-Point Estimating scenario is (O + 4M + P) / 6, where O is the optimistic estimate, M is the most likely estimate, and P is the pessimistic estimate.

This formula is known as the weighted average method or PERT (Program Evaluation and Review Technique) formula. It provides a balanced estimate that takes into account both risk and optimism by giving more weight to the most likely estimate.

Here's why this formula is the best choice:

  1. It gives the most weight (4 times) to the most likely estimate, which is typically the most accurate.
  2. It includes both the optimistic and pessimistic estimates, accounting for potential risks and opportunities.
  3. The division by 6 normalizes the result, providing a weighted average.

Using the given values:
(5 + 4*8 + 14) / 6 = 8.5 days

This result provides a more realistic estimate that balances optimism and risk, as requested by the project sponsor.

The other formulas are less suitable for this scenario:

  • (O + 2M + P) / 4 gives less weight to the most likely estimate.
  • (2O + 3M + P) / 6 overemphasizes the optimistic estimate, potentially underestimating risks.
  • (O + M + P) / 3 + (P - O) / 6 is a more complex formula that doesn't align with standard PERT methodology.
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