The three point estimating technique
Estimating is a crucial aspect of project management. Project managers are expected to
accurately estimate essential elements of the project, such as costs, scope, and time. There are
many different estimation techniques that can be used, depending on what aspect of the project
needs an estimate. Estimation techniques allow project managers to provide better forecasts to
stakeholders and clients and more accurately budget the funds and resources they need for
project success.
The three-point estimating technique can be used to help determine the most realistic time
estimate for a task. It uses optimistic, pessimistic, and most likely calculations, meaning
calculations are based on the “best case” (optimistic), “worst case” (pessimistic), and most
probable scenarios.
Three-point estimation
In this technique, each task receives three estimates: optimistic, most likely, and pessimistic.
Each of these three estimates is then associated with the corresponding amount of time that task
is expected to take.
Optimistic Assumes the best case scenario that issues will not occur Most Likely Assumes some
issues might occur and based on how long the task usually takes under normal circumstances
Pessimistic Assumes the worst case scenario that issues will definitely occur
The three-point estimating process
For each task, add a duration estimate in each category: optimistic, most likely, and pessimistic.
You can get these estimates by doing research on the task or by asking a task expert. As a best
practice, add notes about the conditions that determine each estimate.
Optimistic = Vendor is well-qualified, has all the materials, and shows up on time; Staff shows up in
time and successfully completes training within scheduled amount of time; All equipment works. 4
Hours Most Likely = Vendor is qualified but might not have all the materials; Vendor is new and
needs extra time to prepare; Extra training time has to be scheduled for absentee staff; Minor
glitches with equipment; Training has to be rescheduled. 6 Hours Pessimistic = Original vendor
quits; New vendor has to be hired; Staff no-shows or turnover right before the training; Equipment
isn’t delivered on time or doesn’t work; Training can’t happen until new equipment arrives. 6 Days
Determining a final estimate
To determine your final estimate—the estimate you’re going to use in your project plan—
examine the optimistic and pessimistic timing, then compare it with the most likely timing.
Consider the conditions that are likely to exist while the task is being completed. Does it seem
reasonable that the most likely time can be met? If your team has never completed this task
before, or if dependencies for the task are unknown, then the final estimate should be closer to
the pessimistic estimate. If your team is familiar with the task and you’re able to confirm the
conditions for an optimistic estimate, then the final estimate can be closer to the optimistic
estimate. Alternatively, simply use the most likely estimate, especially if the difference between
the optimistic and pessimistic estimates is minimal (a few hours or no more than one or two
days). A good practice is to build in a “buffer” that accounts for risks that are likely but still
keeps the project progressing at an efficient rate.
Three-point estimation formulas
Some projects will require you to calculate specific numeric values for task time estimates. There
are many online resources that provide more instruction for how to calculate estimates, but
we’ve provided two popular formulas: the Triangular Distribution and the Beta (PERT)
Distribution.
For each formula: E is Estimate (the final estimate you’ll assign to the task), o = optimistic
estimate, p = pessimistic estimate, and m = most likely estimate.
The Triangular Distribution
The weight of each estimate in this equation is identical, which means the most likely case does
not affect the final estimate more than the optimistic or pessimistic estimates.
The Beta (PERT) Distribution
The Beta (PERT) distribution is a weighted average. The most likely estimate receives a
multiplier of four, while the overall divisor is increased to six.
This method takes into account that the most likely case is more likely to occur, so it’s given
more weight. The added weight is reflected in the multiplier of four.
Placing more weight on the most likely estimate increases the accuracy of the estimate. In most
cases, the Beta (PERT) Distribution has been proven to be more accurate than three-point
estimating and is often used to calculate both cost and time estimates.
