Three-Point Estimation Methodology

Imagine you're planning a simple trip to the grocery store. In the best-case scenario, you arrive, find a parking spot right in front, and there's no line at the checkout. In the most likely scenario, the store is a bit busy—you park a little further away, wait in a short line, but everything goes fairly smoothly. In the worst-case scenario, the store is packed, there are no parking spots, you wait in a long checkout line, and the item you need is out of stock. This everyday scenario illustrates the concept of three-point estimates, a valuable tool for planning tasks with uncertainty, particularly in software testing. In testing, whether you're estimating the effort needed for automation framework development, or regression test execution, considering three different outcomes—Optimistic, Most Likely, and Pessimistic—can provide a more realistic estimate. Let’s break it down with a work-related example. Suppose you're preparing a test strategy. If everything goes perfectly, it might take 8 days (Optimistic). If typical challenges arise, it could take 10 days (Most Likely). But if significant delays occur, it might take 12 days (Pessimistic). Using the formula for three-point estimates: The formula for calculating the estimate using these three scenarios is: E = (Pessimistic + 4 x Most Likely + Optimistic) / 6 Applying this to our example: E = (12 + 40 + 8) / 6 = 10 days This approach provides a balanced estimate, leaning towards the most likely scenario, while still considering the best and worst possibilities. While this method is more time-consuming and requires thorough documentation to avoid misunderstandings, it ultimately leads to more accurate and realistic project timelines. Have you tried using this technique in your projects? Please share your experience in the comments below. #SoftwareTesting #QualityAssurance #TestMetry #Estimation

Whether you're estimating time, cost, or resources, the method you use can make a significant difference. A simple and effective estimation technique that I often rely on is the 3-point estimation technique. This method is used to estimate the duration or cost of a project task by considering three different estimates: Optimistic Estimate (O): Ideal scenario Pessimistic Estimate (P): Worst-case scenario Most Likely Estimate (M): Realistic scenario These three estimates are then used to calculate a weighted average, providing a more realistic and balanced estimate: Expected Estimate = (O+4M+P)/6 Why Use 3-Point Estimation? 1. It provides a more accurate estimate compared to single-point estimates, which can often be overly optimistic or pessimistic. 2. By accounting for the best-case and worst-case scenarios, project managers can better prepare for uncertainties. 3. It enables project managers to plan more realistically by incorporating potential variability into the estimates, leading to more achievable project timelines and budgets. Suppose a team is tasked with developing a new feature for a product. After discussion, the team comes up with the following estimates: Optimistic (O): 3 days Most Likely (M): 5 days Pessimistic (P): 9 days Using the 3-point estimation formula: E = (3+4(5)+9)/6 The expected duration for the task is approximately 5.33 days. This technique is particularly useful in projects with a high degree of uncertainty or where historical data is limited. Give it a try! Found this insightful? Give this a thumbs up and follow me as I share my insights around digital transformation, product development and being an AI Power User. 😎 

Estimating costing in projects is a key part of project cost management. It involves forecasting how much money will be required to complete project activities. Here’s a breakdown of how it’s done, including the types, tools, and techniques used: 🔹 1. Cost Estimating – Definition Cost estimating is the process of developing an approximation of the monetary resources needed to complete project activities. It includes direct and indirect costs, such as: Labor Materials Equipment Services Facilities Overheads Contingency reserves 🔹 2. Types of Cost Estimates Estimate Type Description Accuracy Range Used When Rough Order of Magnitude (ROM) Broad estimate for feasibility phase -25% to +75% Early project phases Budget Estimate More refined, used for funding requests -10% to +25% Planning phase Definitive Estimate Most accurate, used for baselines and control -5% to +10% Execution/Pre-construction 🔹 3. Common Cost Estimating Techniques A. Analogous Estimating (Top-Down) Based on historical data from similar projects. Fast but less accurate. ✅ Example: Last bridge project cost $1.2M, so estimate similar cost. B. Parametric Estimating Uses mathematical models based on historical data and variables. ✅ Example: $50 per meter of cable × 1,000 meters = $50,000. C. Bottom-Up Estimating Estimates each activity or work package and sums them up. Most accurate but time-consuming. ✅ Example: Labor (300 hrs × $40/hr) + Materials ($5,000) + Equipment ($2,000). D. Three-Point Estimating Considers uncertainty with three estimates: Optimistic (O), Most likely (M), Pessimistic (P) Expected Cost (PERT) = (O + 4M + P) / 6 ✅ Example: ($10K + 4×$12K + $15K) / 6 = $12.17K E. Expert Judgment Use the knowledge of experienced professionals or SMEs. ✅ Often used in combination with other methods. F. Reserve Analysis Adds contingency for identified risks and management reserve for unknowns. ✅ Example: Add 10% of total cost for contingency. 🔹 4. Outputs of Cost Estimating Process Cost estimates Basis of estimates (assumptions, methodology) Project documents updates (e.g. risk register, schedule) 🔹 5. Tools & Software Microsoft Project, Primavera P6 Spreadsheets (Excel) Cost estimating software like CostX, RSMeans, or specialized ERP tools Would you like an example of a cost estimate worksheet or a template for your type of projects (e.g. construction, electrical, hydraulic)? #costing #estimating