The “Pessimistic estimate” is used in the PERT formula and is represented as “P.” Pessimistic Estimate (P)Įstimate for all unfavorable conditions with all negative risks occurring and no mitigation of negative risks The Optimistic Estimate is the “best-case” and thus shortest duration, or lowest cost, to complete the work. The “Optimistic estimate” is one value within the PERT formula and is represented as “O.” Optimistic Estimate (O)Įstimate for all favorable conditions with no risks or changes When studying PERT as part of preparing to take the PMP® exam, it is important to know it is one type of three-point estimating, what it can be used to estimate (duration or cost), and when in the project to use it.
PERT has become the most used and popular method of choice among project managers due to its reliability and accuracy. PERT has been used across the globe, in many industries, and for decades. Tip: Do not rely entirely on one estimation technique.Understanding PERT for Projects: Three-Point Estimating PMP Use other industry practices, such as the Delphi Method for greater accuracyĪ disadvantage with Bottom-up Estimation is that the overall effort may grow with the degree of planning.Leverage the people that will actually do the work (commonly used in Agile projects).Include Subject Matter Experts (SMEs) in the estimation process.Since the Bottom-up Estimation technique uses estimates from a task level, it is imperative for you to make accurate task estimates. Bottom-up estimation is fairly accurate and is possibly the most often used estimation technique for deriving the cost estimates. You would then perform this calculation for all activities. In the Bottom-up Estimation technique, you aggregate individual estimates for each task in the Work Breakdown Structure (WBS) up till the summary node on the WBS. This type of estimation is often used in projects. By applying the resource cost rates to the Estimate Activity Resources (a Project Time Management) process, you can determine the total cost for the resources on a project. However, with the advent of PMBOK version 4, Parametric Estimation has been clubbed with Analogous Estimation.
PMP Update: In the Project Management Book of Knowledge (PMBOK) version 3, Parametric Estimation was a separate tool. The accuracy of Parametric Estimation is dependent on the assumptions made!
Parametric Estimation leverages software that takes historical information as the input, makes assumptions, and then extrapolates the information to compute the overall cost estimates. The accuracy of analogous estimates is dependent on the similarities between the two projects. Organization has designed and developed an Intranet for a company, you could use the same estimates for the design and development of an Intranet for another company. In this type of estimation, estimates from a closed project are used to determine the estimates for the new project. Bottom-up Estimation Analogous Estimation.Some types of project cost estimating techniques that are commonly used are: Before you can perform cost estimation, you need to have completed the following processes: Define Scope, Create WBS, Define Activities, Sequence Activities, Estimate Activity Resources, and Estimate Activity Duration. Accurate cost estimates help you complete a project on-budget.