Three-Point Estimate
DE: Drei-Punkt-Schaetzung
Using optimistic, most likely, and pessimistic values to estimate duration or cost.
Detailed Explanation
Three-point estimating uses three values — optimistic (O), most likely (M), and pessimistic (P) — to define an approximate range for an activity's cost or duration. Two common formulas are: PERT weighted average (O + 4M + P) / 6, and simple average (O + M + P) / 3.
This technique accounts for estimation uncertainty by producing a range rather than a single number. The PERT formula gives the most likely estimate 4x the weight of the extremes, producing a more moderate result that accounts for the common tendency toward the most likely outcome.
Three-point estimates also enable calculation of standard deviation = (P - O) / 6, which quantifies the uncertainty. Combined with probability theory, this allows PMs to express confidence levels: the estimate plus one standard deviation gives approximately 84% confidence.
Key Points
- Three values: Optimistic (O), Most Likely (M), Pessimistic (P)
- PERT formula: (O + 4M + P) / 6
- Simple average: (O + M + P) / 3
- Standard deviation: (P - O) / 6
- Provides range with confidence levels, not false precision
- Input for PERT analysis and Monte Carlo simulation
Practical Example
Estimating website development: O = 8 weeks, M = 12 weeks, P = 22 weeks. PERT = (8 + 48 + 22) / 6 = 13 weeks. SD = (22 - 8) / 6 = 2.3 weeks. The PM presents: '13 weeks expected, with 84% confidence of finishing within 15.3 weeks.' This transparent range is more useful than a single-point '12 weeks' estimate.
Tips for Learning and Applying
Get honest estimates — especially pessimistic ones, which people tend to understate
Use PERT for higher accuracy; simple average for quick estimates
Present ranges with confidence levels to stakeholders
Combine with Monte Carlo for project-level analysis
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