Home › Forums › Program and Project Management › Understanding Standard Deviation and Variance in estimates
This topic contains 1 reply, has 1 voice, and was last updated by Jo Youngblood 6 years, 4 months ago.

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March 17, 2012 at 5:17 am #156447
I was wondering if someone could help me to understand what story standard deviation and variance should tell the estimator.
Formulas:
PERT: (O+4ML+P)/6
Std Dev: (PO)/6
Variance: (PO/6)^2
Example:
In the example below the we are calculating 1 Std Dev from the mean, i.e. the PERT value. Therefore there is a 68% certainty the estimate is 160.83 +/ 8.33 (152.5 to 169.16). At 95% the estimate is 160.83 +/ 2 * 8.33 (144.17 to 177.49).
So now what?
How do I distinguish a favorable Std Dev from a unfavorable Std Dev?
What is the Variance telling me?
How do I apply this to my final estimate?
Etc…
O ML P PERT Std Dev Var 150 160 175 160.83 8.33 69.44 125 130 135 130.00 1.67 2.78

March 20, 2012 at 1:47 pm #156449
Well I typically find it useful to analyze standard deviations and variance by looking at a whole picture of data points. Two points may or may not give you a good idea. But what I notice is that as O increases so does your variance and standard deviation. This may indicate that your error measurement is not standard across all measures but has an interaction term with O (ie. there may be another variable or interaction term missing in your prediction formula).

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