Three-point estimating is one of the popular project estimation techniques. In this article, we shall discuss what Three-point estimating is and the estimates involved in this technique such as the Optimistic, Pessimistic, and the Most Likely Estimate. Then we shall see the formula for calculating three-point estimating, and other aspects involved. So, let’s start.

## One-Point Estimating

Before going into Three-Point estimating, we shall first see what **One-Point Estimating or Single-point estimating** is. In Single-Point Estimating an estimator submits one estimate per activity. But there are problems with this estimating. It is less accurate as the individual activity estimates could be uncertain.

## Three-Point Estimating

The accuracy of a single point estimate can be improved by considering the estimation of uncertainty and risk. This is where the concept of **Three-Point Estimating** comes in. It is calculating **three different estimates**, to **factor in risk and estimation uncertainty**, and finding their average to get the most optimal estimate.

**PMBOK defines Three-Point Estimating** as *“A technique used to estimate cost or duration by applying an average or weighted average of optimistic, pessimistic, and most likely estimates when there is uncertainty with the individual activity estimates.”. *

Three-Point Estimating can be used to estimate **both duration and cost.**

The Three-Point estimate of **duration** is called **Expected Duration**.

The Three-Point estimate of **cost** is called **Expected Cost.**

## The Three Estimates in Three-point Estimating

**Optimistic Estimate ****(O)**

It is the estimate based on the best-case scenario for the activity.

**Pessimistic ****Estimate (P)** –

It is the estimate based on the **worst-case scenario** for the activity.

**Most Likely ****Estimate** **(M) **–

It is the **most realistic** estimate based on the resources likely to be assigned, dependencies on other participants, possible problems that may arise, etc.

The final Three-Point estimate is calculated by calculating the **average of the above 3 estimates**. Now, the average can be a simple average or a Weighted average.

The Estimate that uses **Simple average** is called the **Triangular Distribution**, on the other hand

The Estimate that uses **Weighted** is called the **Beta Distribution.**

The formula for **Simple Average **or **Triangular Distribution** is

**E = ( P + O + M )/3 **

The formula for **Weighted Average **or **Beta Distribution** is

**E = ( P + O +4 M )/6**

The concept of the three-point estimating originated from the Program Evaluation and Review Technique (PERT), which uses 3 estimates to define an approximate time duration for an activity. PERT uses weighted average.

**Three-Point Estimating – Important Points to remember**

- Can be used to
**estimate both Duration and Cost,**but**not used**to**estimate resources.** **More accurate**than Analogous and Parametric estimating- Allows more
**consideration for risk, uncertainty**of estimating, bias, etc in the estimation process. - Used when there is insufficient historical data or when using more judgmental data.

Other commonly used estimating techniques are –

Also, check the comparison of the Estimating Techniques.