In project management, it is important to provide an estimate of the project duration. There are several methods for doing this. One of these is PERT, which uses three estimates per activity to get the final estimate for the project plan.
Important Terms

O is for the most optimistic or best case scenario. M is for the most likely or "normal" scenario. P represents the most pessimistic or worst case scenario.
The Formula

The formula for PERT is (4M + O + P) ÷ 6. The standard deviation can be found by dividing (P  O) ÷ 6.
When to Use

Use PERT on very large, complex projects or when project duration is uncertain. PERT uses the mean or weighted average estimates to calculate project duration by requiring three time estimates per activity. PERT can also be used to estimate cost.
Standard Deviation

It is possible to calculate a range of durations based upon a given confidence level. To calculate such a range, it is necessary to know the appropriate number of standard deviations (also known as sigma) to apply to a given confidence level:
± 6 = 99.99 percent
± 3 = 99.73 percent
± 2 = 95.46 percent
± 1 = 68.26 percent
Considerations

The larger the standard deviation is, the larger the risk to the project. This means that there was a larger spread between the optimistic and the pessimistic estimates.
References
 "PMP Exam Prep Boot Camp"; Global Knowledge; 2007
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