What is PERT or Three Point Estimation?
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05:16 – PERT Formula
09:12 – 3Point Formula
11:40 – Calculation Example
14:48 – Probability as function of Duration
When we look at duration estimates of activities, we typically use a fixed duration based on estimation rules and experiences. From experience we know that the duration of activities varies even when we do everything correctly.
We do not only know this from from project management but in reality natural variability is common and should be accepted as such. The natural variability results in varying durations of activities, varying dimensions of products that are being produced and so on.
Imagine going to your work by car or public transportation and you would record the travel time. You will see that the time is not constant and you can put all in a histogram and find the mode or most probable duration interval and then you can find the values which correspond with the 1% borders.
Based on these data, it is possible to define a most probable estimate which is the mode or also written as m, the low value with probability of 1% is the optimistic estimate or a and the high value with 1% probability is the pessimistic estimate of b.
Based on these three values it is possible to calculate the expected duration or the duration with a probability of 50% and the standard deviation.
Basically, there are two simplified formulas. The PERT formula gives a weight of 4 to the probable estimate or mode while the sPoint formula gives the same weight to all estimates.
Based ont he expected duration, it is possible to determine the probability that a project will be completed within a specific time span.
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