# Three-point estimates vs PERT - What's the difference?

Project Estimation and PERT (Part 3): There's a very little probability of completing a project on any one given date. Three-point estimates use 3 different estimates - Optimistic (O), Most Likely (M) and Pessimistic (P) - to estimate project duration and cost. Rather than using a single estimate, three-point estimates use a range of estimates. The three estimates take into consideration the risk in the project and help project managers develop a more realistic schedule or budget. For the purpose of planning, a single estimate is derived from the three-point estimates. Let's take the example of Activity Duration Estimate.

#### What is simple average three-point activity duration estimate?

If you use a "simple" average estimate for a project, you would take a mean of all the 3 estimates i.e. add up all the 3 estimates and divide them by three.

Simple average Duration Estimate = (O + M + P) / 3

#### What is PERT?

Program Evaluation and Review Technique (PERT) is a type of "weighted" average duration estimation technique. If you use "weighted" average estimate for a project, you may give different weightage to the three estimates. PERT uses 1-4-1 weightage i.e. it gives 4 times more weightage to the Most Likely (M) estimate.

PERT Duration Estimate = (O + 4*M + P) / 6

#### Summary

PERT is a type of three-point estimation technique. PERT uses a "weighted" average estimate rather than a simple average. Three-point estimates are also used for Monte-Carlo Analysis.

Suggested Reading: It Takes Three to Make Good Estimates by Oliver F. Lehmann

#### Full 9-part series on Project Estimation and PERT

1. Get Intimate with PERT
2. The Power of Three in Project Estimation
3. Three-point estimates vs PERT - What's the difference? (you are here)
4. Say Hello to PERT
5. The Magical Formula of PERT
6. Probability and Statistics in Project Management
7. PERT and CPM get Cozy
8. PMP Quiz Contest - Activity Duration Estimates
9. Standard Deviation and Project Duration Estimates
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1. Sir,
I have few doubts about contigency reserves
1) Does it accounts for costs and time towards risk reponse action say time and cost towards making change in PM plan to avoid risks

2) is contingency reserve is just for residual risks.

Also another doubt is the way Project Schedule and Schedule Baseline been used.
Only Cost Management Process use schedule baseline whereas risk and quality process uses Project Schedule

2. @ Anonymous:

I'm not clear about all the questions but I'll attempt to answer whatever I could understand.

1. The time and money spent to "plan" the risk response is not included in the contingency reserve. But, the time and money spent to respond to the risk (when it occurs), will be taken from the contingency reserve.

2. Yes, it's for residual risks - the risks that remain after risk response planning has been completed. Residual risks are "accepted" risk for which you make contingency or fallback plans. It would probably not be worth the effort to completely eliminate them.

Regards.

3. Thanks

Now my another doubt is
In the risk response there is a tool called "Contigency Response Strategies" whats the real significance of this tool coz there is already contigency plan in the risk register.

whats the real difference between Project Schedule and Schedule Baseline? why it is not redundant

4. @ Anonymous:

1. Contingency Response Strategies identify the triggers that invoke the Contingency Plan.

Let's take the example of an air-conditioner. If you set the thermostat at 22 deg C, as soon as the room temperature drops below 22 deg C, the compressor will be turned off.

Therefore, 22 deg C is your event or trigger point. And the response is "turning off the AC".

In Contingency Response Strategies, we identify the event that needs to occur in order to invoke the contigency response plan. We don't identify the response plan here, but only the trigger.

Does it make sense now?

2. Your question about the difference between Project Schedule and Schedule Baseline is very good.

Schedule Baseline is an "approved" snapshot of a Project Schedule.

But you asked why are they not redundant. Again a good question.

Imagine that you have created a Project Schedule using MS Project during the planning phase. It is approved by the management. This approved version is the "Schedule Baseline". Now your first task got completed. Where do you go and log this activity completion? You open your Project schedule file (created in MS Project) and mark that activity as 100% complete. You also put the actual start and completion date, and the hours spent on the activity, in the file. Save the file and close it. Now the file you just updated is your "Project Schedule". This is where you track the "actual" progress. You don't touch the "Schedule Baseline".

Now going forward, you want to compare how your project is progressing in terms of schedule. How do you do that? You compare the Project Schedule (actual) to the Schedule Baseline (baseline) and look for variances.

Now do you see why you need both Project Schedule and Schedule Baseline?

In Summary:

Project Schedule ~ Actual
Schedule Baseline ~ Baseline

You compare the two to find variance.

Let me know if you still have questions.

Good luck.

Now my new doubt is where risk register is
As per Head First (page 557) "The risk register is built into the Risk Management Plan. Updates to
the risk register are the only output of the Identify Risks process."
But i guess Risk register is part of project documents.

6. Hello Preetham,

Sorry for the late response.

PMBOK Guide, Fourth Edition identifies Risk Register as a separate project document. Refer to Table A1, Appendix A of the Guide. It is no longer considered a part of the Risk Management Plan.

Whenever you have such doubts, refer to the PMBOK Guide. As far as the PMP Exam is concerned, PMBOK Guide is the Bible, and what it says overrules every other prep book.

Good luck.

7. Hello Preetham,

I have a request for you. Please try to post your comments on articles related to your topic, so that others can benefit from our exchange too. If you can't find a matching article, you can simply post the queries on the Study Notes page. It's my mistake that I've not made a page for general Q&A. I'm also learning with experience.

All your questions have been very good, and I really enjoyed answering them. Keep them coming !

Thanks.

8. Hello, thanks for all your articles that help clarifying several subjects. On this particular one, I believe it could be interesting to add that:
The so-called simple average is related to triangular probability distribution
The weighted average as per PERT is related to beta probability distribution

Both distribution being defined from the 3 parameters (O,M,P)

Regards
Anthony P.

9. Hi Anthony,

Thanks for pointing that out.

Best Regards.

10. For a triangular distribution, the mean and variance are calculated as follows:
Mean = (pessimistic + optimistic + most likely) / 3
Variance = [(optimistic - pessimistic)^2 + (most likely - pessimistic) * (most likely - optimistic)] / 18
For a beta distribution, the mean and variance are calculated as follows:
Mean = (pessimistic + 4*(most likely)+ optimistic) / 6
Variance = ((optimistic - pessimistic)/6)^2
In this example, the calculations were performed assuming a triangular distribution.

Thanks
Saurabh

11. variance SD NDT and float :
by beta dis V = ( o-p/6)^2 = SD
in NDT 68.2% chance for a mean duration 48 days with sd=4, activity will vary = 44 days to 52 days
and by variance formula if sd is 4 then activity will vary +/- 16 days means = 32 to 64 days.
which is correct answer, if this is single activity what is correct float.if i say it should be finished in 50 days.