Hello folks, Hope everyone is doing well. Three Point Estimation is most frequently tested question on the PMP exam. The probability on your PMP Exam to be tested around this concept is 100%. 2-3 questions have been seen on the exam that are based on this concept.
So let’s read this well and learn about all of it today:
Purpose of Three Point Estimate technique: Used to arrive at a better estimate of the time required to complete a particular activity, work package, and can be rolled up to the entire project. Further, this technique can be used for Time as well as Cost also.
PMBOK suggests two different methods for Three Point Estimation as described below:
1. Triangular Distribution: (P + O + ML ) / 3
This is like a simple average of the three estimates. When plotted in a chart, it usually results in a sharp peak, thus the name Triangular Distribution.
2. Beta Distribution (PERT): (P + O + 4ML ) / 6
Imp Note: This method is the most reliable and accurate method but historical data from similar projects and expert opinion is required to use this method.
This is a weighted average. More weight is given to the most likely. If plotted against a chart, this beta distribution will result in an more uniform, bell shaped curve, called a normal distribution. This has been tested in several different industries, across different countries, and over different time periods, but has always turned out to be more accurate than the 3 point estimate. So this method has become the most used and popular method of choice among project managers.
When do you use Beta against Triangular Distribution?
Beta Distribution is preferred in cases where we have a lot of historical data, and is more useful for similar type of projects, and experts are providing this based on historical evidence & experience .
Triangular will be used when we are executing the project for the first time and there is lack of historical data from similar projects. Logically speaking too Triangular distribution is a method used when there is no basis to give more weight to a particular estimate. These are most likely not based on a lot of experience or expertise… but are more of a guess-timates.
Tips for PMP Exam:
Look for subtle clues in the exam question. If the question relates to no experience, or not much reliable historical data, then it is best to use Triangular distribution.
If the question suggests that there are experts, there is historical data from previous similar projects and more accuracy if desired then Beta method is the method of choice.