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Cost Planning; Three-Point Estimation

Three-Point Estimation: A Guide for Civil Engineering Projects

January 2, 2024 Civil Bites 0 Comments

Three-point estimation is a valuable technique for generating more robust and realistic estimates in civil engineering projects.

It accounts for uncertainty and potential risks by considering three scenarios: optimistic, most likely, and pessimistic. Here’s how it works:

The Three Points:

  • Optimistic (O): represents the best-case scenario, assuming everything goes flawlessly with ideal conditions.
  • Most Likely (M): Reflects the expected outcome based on experience, knowledge, and current project conditions.
  • Pessimistic (P): accounts for potential complications and unforeseen challenges, representing the worst-case scenario.
Cost Planning; Three Point Estimate
Cost Planning

How to do it:

  1. Identify the task or activity to be estimated. This could be anything from excavation time to the material cost of a specific component.
  2. Gather information and resources. Analyse relevant data, consult with experts, and consider historical projects.
  3. Brainstorm and estimate the three points (O, M, and P). Be realistic and objective, avoiding biassed expectations.
  4. Calculate the expected value (E). Use one of two common formulas:
    • Triangular Distribution: E = (O + M + P) / 3
    • PERT Estimate: E = (M + 4O + P) / 6
  5. Analyse the range (P-O). A large range indicates high uncertainty, requiring further investigation or risk mitigation strategies.

When to apply it:

  • Early project stages: feasibility studies, planning, and budgeting phases to set realistic expectations.
  • Estimating complex or unfamiliar tasks: where standard estimating methods are insufficient or lack data.
  • Projects with high uncertainty: when external factors or risks significantly impact outcomes.
Cost Planning; Three Point Estimate
Cost Planning

Advantages in Civil Engineering:

  • Improved accuracy: accounting for variability leads to more realistic and credible estimates.
  • Enhanced risk management: identifies potential challenges and facilitates proactive mitigation strategies.
  • Better resource allocation: enables efficient resource allocation based on expected needs and potential fluctuations.
  • Increased transparency: encourages communication and collaboration by fostering informed discussions about uncertainties.
  • Reduced project overruns: Early identification of risks helps prevent unexpected cost and schedule deviations.
Cost Planning; Three Point Estimate

Additional Tips:

  • Use software tools or templates to streamline the process.
  • Facilitate team discussions and encourage diverse perspectives.
  • Regularly update estimates as project information evolves.
  • Combine three-point estimates with other techniques for a comprehensive analysis.

By effectively utilising three-point estimation, civil engineering projects can achieve greater accuracy, mitigate risks, and ultimately enhance project success.

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