PMP aspirants often come across the 3 Point Estimate when studying for the PMP exam for the first time. There are 2 different formulas for the 3 Point Estimate, and it is generally not clear to most project managers as to which one to use, and when, or why.

I have written about the 3 point estimation technique quite some time back, about the 2 different formulas and how to use them. This article takes it further, to explain some of the basic differences between the two , and make it easy for you to prepare for the PMP exam, as well as apply this useful estimation technique in your projects.

The Three Point Estimate technique is 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.

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.

Beta Distribution (PERT): (P + O + 4ML ) / 6

*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 PERT and when do you use Triangular Distribution?**

However, the 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 . If we are doing a project for the first time, and there is no previous history of similar projects to fall back on, it may make sense to use the Triangular distribution, as there is no basis to give more weight to a particular estimate. Thus, a Triangular Distribution is more suited for judgemental data estimates. These are most likely not based on a lot of experience or expertise… but are more of a guess-timates.

As with all estimates, the more accurate your estimates, the better the Triangular and Beta Distribution curves, and the better we are able to estimate the project risk and its completion on time and on cost.

For PMP exam, look for subtle clues in the exam question. If they talk about a new project, no experiece, or not much reliable data available, then it is best to use Triangular distribution.

And if the team is made of experts, this is a similar to previous projects, we need a more accurate estimate etc. then it is best to go for the Beta Distribution using the PERT formula of weighted average.

Hope this helps in your PMP exam preparation and in your real life projects. Do drop a note in the comment below…

Cheers,

Vinai Prakash

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