Project Estimation Methods – WBS, 3-Point Estimation and PERT

Work Breakdown Structure (WBS) is used in three types of Estimation:

1.   Estimation using Work Breakdown Structure

2.   Three Point Estimation

3.   PERT

The Project Management Body of Knowledge (PMBOK) defines the Work Breakdown Structure as a "deliverable oriented Hierarchical Decomposition of the Work to be executed by the Project Team." WBS is usually derived with the participation of the entire team and is based on the team’s collective experience.

WBS can be used to arrive at the effort estimates for the project. WBS is also used in the estimation methods – Three Point Estimation and PERT. I have seen that some confusion exists regarding Three Point Estimation and PERT and they are used interchangeably. However, the two techniques are different.

Estimation using Work Breakdown Structure (WBS)

In this estimation method, the system is broken based on the activities in the system. The activities are further broken into tasks. Based on the tasks, effort and schedule are estimated.

Normally, Wideband Delphi method is used for arriving at the effort estimate of the tasks. One can use Three Point Estimation method also for the effort estimate.

Three Point Estimation and PERT

Three Point Estimation and PERT are based on three values for each task –

1.     a most optimistic estimate (O)
2.    a most likely estimate (M)
3.    a pessimistic estimate (Least likely estimate (L))

Three Point Estimation

Three Point Estimate (E) is based on the Simple Average and follows Triangular Distribution.

E = (O+M+L)/3

As you are aware, in a Triangular Distribution,

Mean = (O+M+L)/3

Three Point Estimation is typically used for small repetitive projects.

PERT (Project Evaluation and Review Technique)

In this method, the most-likely estimate (M) is weighted 4 times more than the other two estimates (optimistic (O) and pessimistic (L)). Thus, PERT Estimate (E) is a weighted average and follows Beta Distribution.

E = (O+4*M+L)/6

PERT is commonly used along with CPM (Critical Path Method). CPM highlights the tasks that are critical to the project. If there is a delay in these tasks, the project gets delayed.

PERT is classically used for large non-repetitive projects, usually R&D projects.