Three-Point Estimating: Definition & Role in Scheduling

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  • 0:04 Estimating
  • 0:45 Three-Point Estimate Defined
  • 1:36 Process
  • 2:38 Example
  • 3:39 Lesson Summary
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Lesson Transcript
Instructor: Brianna Whiting

Brianna has a masters of education in educational leadership, a DBA business management, and a BS in animal science.

Knowing how long a project will take can be a bit tricky. There are so many factors that can affect the duration. In this lesson we will learn one technique that helps a company be more accurate in estimating.

Estimating

Meet Hailey! Hailey is a manager for Jewelry R' Us. On average, Jewelry R' Us completes about four projects a month without any real issue. But, lately, the company has been struggling to get three done each month.

Jewelry R' Us has always scheduled four projects with four different customers each month. But when they fail to complete all four projects, one customer a month is not getting their project completed, which leads to upset.

Hailey knows that if they're going to continue to keep their current customers and gain new ones, she and her team have to be better at estimating how many projects they can realistically complete each month. Hailey decides to use a technique called three-point estimating, which should help her improve estimates.

Three-Point Estimate Defined

Three-point estimating is a tool that companies can use to help increase the accuracy of cost and time estimates. Like the name implies, there are three parts which are the three different estimates.

  1. An optimistic estimate is what Hailey and her team hope will be the amount of time to complete their project assuming everything goes as planned.
  2. The pessimistic estimate is the worst case scenario and is an estimate that Hailey and her team give if everything goes wrong.
  3. The most likely estimate is what will most likely happen and usually falls between the pessimistic and optimistic estimates.

For example, if Hailey is completing a project making necklaces, the following estimates might be given:

  • Optimistic: All of the supplies come in early
  • Pessimistic: None of the supplies come in on time
  • Most likely: The supplies will take the normal amount of time to come in

Process

You may be wondering how a three-point estimate works. What are the steps? Let's take a look now.

1. Discussion

The first step is to meet with the team and discuss what you may encounter that would make the project take longer and what could occur that may result in the project taking less time. This allows Hailey's team members to voice their concerns so that everyone is aware and they are not blamed if the project takes longer than scheduled.

2. Estimates

This means making an estimate for each of the crucial steps in the project. Hailey knows that she will need an optimistic, pessimistic, and most likely estimate.

3. Calculate

When you have the estimates, you can then plug them into the formulas.

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