How to calculate 3-Point Estimate of a Project
Coming up with a realistic project estimate is one of the main headaches of a project manager. Although a lot of articles have been written on how to get project estimation 100% accurate, the activity continues to be a guesswork. Most projects fail because of poor estimation and there are a number of reasons for that. Below are the problems associated with poor estimation in no particular order:
False comparison: Estimations based on some factual data from people that have done similar projects in the past are more reliable than estimations from self-acclaimed experts who haven’t actually performed similar projects themselves.
Inaccurate precision: When a project estimate is quoted as a single digit, that is a problem. This is because since estimation is mostly guesswork, the numbers should be in ranges.
Shoe-horned estimations: In fact, every estimation should be done by the people that will actually do the work. If someone else outside the project team creates a predetermined timeline, that in effect is bad for the success of the project.
Subjective estimation: Have you ever looked at an estimate and wondered where did this come from? That is the type of estimate we are talking about here. It is totally unjustifiable and looks like it was plucked from the thin air.
Poor coordination: If an estimation doesn’t take into account the integration and coordination of all the project team members, that in fact creates room for error which will, in turn, reflect in the failure of the project.
Recognizing different ways in which a project could go wrong is a good start in finding ways to prevent it. If you asked me personally what is the best Estimation Technique that will take all these pitfalls into consideration and as well provide data that will help a project manager make some proactive decisions, I’d say 3 Point Estimation. (a.k.a) PERT — Program Evaluation and Review Technique. It is the best in my opinion because:
- It provides insight into the risks associated with each subtask in the project.
- Accuracy isn’t 100% but it is close when compared with other estimation methods.
- Project team members commitment is reinforced because this technique considers their opinion.
Why is it called 3 Point Estimation Technique?
It is basically because members of your team will need to write down their Realistic (R), Pessimistic (P), and Optimistic (O) amount of time/work needed to deliver their part of the project. Which you as the project manager need so as to produce the final estimation for the project.
One thing I like about the 3 point estimation technique is that the process is quite simple. So let me walk you through the steps:
Step 1 — Work with the project team members individually to identify the negative(bad) and positive risks associated with their tasks.
Step 2 — Ask them to make 3 estimates namely;
- Realistic (R) That is the average time it will take them to complete the task considering their level of expertise and not minding the project sponsor’s deadline.
- Pessimistic (P) The time to complete the task considering all the problems that might occur. For instance bug fixes, minor glitches, and studying of individual modules. Don’t take into account sickness, lawsuits and major changes in the task specifications.
- Optimistic (O) The time it will take to perform the tasks as fast as possible. Taking into consideration their experience and not considering interference from other people or cancellation of the task.
Step 3 — This is the boring part because here you need to do some simple maths. Calculate the
- Mean time = (O + 4R + P) ÷ 6
- Standard deviation = P-O/6
- Mean optimistic time = mean — standard deviation
- Mean pessimistic time = mean + standard deviation
FACT: The mean pessimistic time is the time you need to pay attention to when making final estimation.
Having collected all these information you now need to put them together into a presentable estimation to the project sponsor. Congratulations on completing your first 3-point Estimation, but the main question now is how accurate is your estimation?
Bad news, it’s not 100% accurate but the good news is that it is close enough. IF done correctly, the project is halfway successful. Take it from someone who has successfully leveraged the technique.
Let me know your best estimation technique in the comments.
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