Three-Point Estimation Technique

The creation of three-point estimates begins with a three-step process:

1. Record the optimistic time (a): This represents the minimum reasonable period of time during
which the activity can be completed. There is only a small probability – typically assumed to be
less than 1 percent – that this can be achieved.
2. Record the most likely time (m): This is the time required to complete an activity based on
typical conditions and historical information. Since m would be the time thought most likely to
be met, it is also the mode of the beta distribution.
3. Record the pessimistic time (b): This is the maximum reasonable period of time the activity
would need to be completed. Again, this is only a small probability – typically less than 1
percent.
This information should be gathered from those people on the project team who will perform the
activity. (Note: This example uses time, but the steps can also be applied to cost or work effort.)
With the three estimates, practitioners can calculate the expected time, or weighted average of an
activity, and a probability estimate of a completion time for the entire project. The following
equations are used to estimate the mean (µ) and variance(σ2) of each activity:
µ = a + 4m + b6
This formula is based on the beta statistical distribution and weights the most likely time (m) four
times more than either the optimistic time (a) or the pessimistic time (b).

As the equation shows, the variance is the square of one-sixth of the difference between the two
extreme (optimistic and pessimistic) time estimates. The greater the difference is between these
extremes, the larger the variance.

For example, assume a task has the following estimated durations:

Optimistic (a) = 10 days

Most likely (m) = 13 days
Pessimistic (b) = 25 days
Using the formulas above, the expected time (µ) is calculated:
µ = 10 + (4 x 13) + 25
6
µ = 14.5 (rounded up to 15 days).