According to the PMBOK Guide (Project Management Body of Knowledge), specifically within the Estimate Activity Durations process, Three-point estimating is utilized to improve the accuracy of duration estimates by accounting for uncertainty and risk.
Traditional " single-point " estimates can be unreliable because they don ' t account for the risks or fluctuations inherent in project work. Three-point estimating improves accuracy by considering three distinct scenarios:
* Most Likely ($t_M$): The duration based on a realistic evaluation of the available resources and anticipated interruptions.
* Optimistic ($t_O$): The duration based on an analysis of the best-case scenario for the activity.
* Pessimistic ($t_P$): The duration based on an analysis of the worst-case scenario.
By using these three values, the project manager can calculate an expected duration ($t_E$) using either the Triangular Distribution or the Beta Distribution (PERT).
* A. Analogous: This technique uses the actual duration of previous, similar activities as the basis for estimating the duration of a current activity. While fast and less costly, it is generally less accurate than other methods.
* B. Parametric: This uses a statistical relationship between historical data and other variables (e.g., square footage in construction) to calculate an estimate. It can be very accurate, but its primary purpose is based on scalable data rather than refining individual activity uncertainty through multiple scenarios.
* C. Three-point: As explained, this specifically targets improving accuracy by reducing the impact of bias and uncertainty in the estimate.
* D. What-if scenario analysis: This is a technique used in Develop Schedule and Control Schedule (under Modeling Techniques). It evaluates various scenarios to see their effect on project objectives but is not an estimating technique for an activity ' s duration itself.
Depending on the distribution used, the improved duration is calculated as follows:
* Triangular Distribution: $t_E = (t_O + t_M + t_P) / 3$
* Beta Distribution (PERT): $t_E = (t_O + 4t_M + t_P) / 6$