The Program Evaluation and Review Technique (PERT) is a popular project management estimation technique that can also be used in business analysis for arriving at reasonably accurate figures or guesses. For example, it can be used to evaluate the duration of time required to complete a business analysis effort by using 3 variables to calculate estimates:
1. Most Optimistic (MO) - this is the outcome that is likely to occur under the best of circumstances (with little or no hitches)
2. Most Likely (ML) - this outcome assumes normal conditions or circumstances
3. Most Pessimistic (MP) - this represents the worst possible outcome.
After assigning values to each, apply the formula: (MO + 4ML + MP)/6. The answer you get represents the desired estimate.
If you're involved in a project that requires stakeholders to provide estimates, PERT analysis can come in quite handy. Instead of asking for one estimate, ask for 3: the most likely, the most optimistic and the most pessimistic. Apply the stated formula and the result you get will reveal a more accurate estimate compared to asking for just one value.
The PERT Technique is best used when you have a high degree of uncertainty surrounding your project.
An example of its application:
Ask a Salesman how much he thinks he can sell. Assuming he gives you three values as follows:
- Most Optimistic (MO) = 30 cases
- Most Likely (ML) = 15 cases
- Most Pessimistic (MP) = 5 cases
Apply the formula: (30 + 4(15) + 5) / 6 = 95 / 6 = 15.833 cases
The best estimate is 15.8333 cases. Though there are no guarantees with estimates and the objective is not to eliminate uncertainty, the PERT technique does allow the business analyst pronounce estimates with a reasonable degree of confidence.