Three-point estimating: Improve accuracy in project planning
Tempo Team
In the 1950s, the U.S. Navy began planning the Polaris missile project, a complex defense initiative with many unknowns. Traditional project management methods couldn’t reliably predict how long tasks would take, making it difficult to manage such a large effort. To address this, the Navy developed the Program Evaluation and Review Technique (PERT). This new method accounted for uncertainty and improved timeline estimates.
Today, teams across numerous industries apply the same thinking through a three-point estimating framework. By considering best-case, worst-case, and most likely outcomes for each task, this technique helps project teams build more accurate, realistic plans.
Let’s explore how three-point estimating works and why it’s a valuable project management strategy.
What is three-point estimating?
Three-point estimating in project management improves forecast accuracy by addressing uncertainty. Instead of relying on a single estimate, it considers three scenarios:
Best case (optimistic)
Most likely case (realistic)
Worst case (pessimistic)
This range gives teams a clear picture of potential outcomes and reduces the risk of overpromising or underdelivering. It acknowledges that no estimate is perfect and builds uncertainty into the planning process.
To turn these inputs into actionable data, three-point estimating uses formulas to calculate a weighted average, helping teams account for variability and communicate expectations transparently. The result is a more realistic plan that managers can use to track progress and avoid surprises.
How do you find the three-point estimate?
Here’s how to calculate a three-point estimate using two common formulas:
Triangular distribution formula
The triangular distribution formula calculates the simple average of the three estimates, assuming all three are equally possible. The formula is:
(Optimistic + Most Likely + Pessimistic) / 3
Project managers often use the triangular distribution formula when they have limited data or when they believe the three inputs are equally probable. Although this formula offers a quick way to calculate an estimate, it doesn’t give the most likely outcome extra weight. As a result, the final estimate may be skewed if the optimistic or pessimistic values differ significantly from the most likely value.
Example:
If a task might take four days (optimistic), six days (most likely), or 10 days (pessimistic), the estimate would be:
(4 + 6 + 10) / 3 = 6.67 days
PERT formula
The PERT formula places more weight on the most likely estimate, assuming it’s more probable than the optimistic or pessimistic outcomes. The formula is:
(Optimistic + (4 X Most Likely) + Pessimistic) / 6
This method works well for projects with high uncertainty, where outcomes can vary widely. By giving the most likely outcome extra weight, it reduces the influence of overly optimistic or pessimistic estimates and produces a more balanced, realistic forecast.
Example:
Using the same numbers as the previous example:
(4 + (4 X 6) + 10) / 6 = 6.33 days
How to apply three-point estimating in project planning
Three-point estimating is particularly useful during the planning phase of a project when project managers need to account for uncertainty and variability. Here’s how to get started:
1. Identify tasks that require estimation
Break the project into individual tasks. Focus on high-risk activities or those with many dependencies, as these areas benefit most from a three-point approach. The goal is to identify uncertainty early in the planning process.
Breaking tasks into smaller components leads to more accurate estimates and helps project managers compare predicted versus actual outcomes later. If the team uses a work breakdown structure, this is the level where three-point estimating provides the most value.
2. Collect input from experts
Engage team leads or subject matter experts who understand the work involved. Ask them to provide three estimates for each task: an optimistic scenario, the most likely case, and the most pessimistic situation. Request the reasoning behind each estimate to understand their thought process.
3. Choose the correct formula
Select the appropriate three-point estimate formula based on the nature of the task and the available data. Use the triangular distribution method for relatively predictable work, and choose PERT when there’s higher risk or greater variability.
4. Calculate the estimate
Input the optimistic, most likely, and pessimistic values into the chosen formula, then document the result for each task. Keep a record of all three estimates along with the final calculated value. This record helps explain decisions later and highlights how risk influenced the planning process.
5. Document assumptions and risks
Note any assumptions the team made during the estimation process, such as resource availability, task dependencies, or external constraints. Use the pessimistic estimates to identify potential risks, allowing you to track them during execution and adjust plans if they materialize.
6. Integrate estimates into your project schedule
Incorporate the calculated estimates into your project timeline to identify potential bottlenecks and prepare for variations in task completion. This ensures your schedule remains flexible enough to accommodate uncertainty.
Benefits of using three-point estimating
Three-point estimating structures projections around several possible outcomes, encouraging teams to confront uncertainty and conduct more proactive planning. Project management professionals pursuing PMP certification often learn to apply this technique to improve project forecasting.
Here are the key benefits of using three-point estimating in real-world project environments:
Reduces estimation bias
Single-point estimates often reflect optimism or the pressure to meet deadlines. In contrast, three-point estimating requires teams to consider a range of outcomes, helping them acknowledge uncertainty.
Encourages risk-aware planning
Teams that explicitly identify worst-case scenarios can prepare for risks early in the planning process. This helps them manage delays or cost overruns when they arise.
Improves estimate accuracy
Combining optimistic, most likely, and pessimistic values gives teams a fuller picture of possible outcomes. They can then create schedules and budgets that align more closely with real-world results.
Highlights uncertainty in specific tasks
Significant gaps between the best and worst estimates indicate tasks with high variability. Such outliers often signal an unclear scope or external dependencies that may impact delivery. These red flags help project managers decide where to add time or cost buffers and where to assign more experienced team members to reduce risk.
Strengthens team input and alignment
Three-point estimating relies on input from the people doing the work. By involving subject matter experts early, teams build a shared understanding of what's realistic. This upfront alignment helps them navigate changes throughout execution, as everyone already knows the assumptions and risks behind each estimate.
Builds data for improvement
Each time a team completes a task using three-point estimating, they create a record of predicted versus actual outcomes. Over time, this data allows them to refine future estimates and adjust risk tolerance across projects.
Managing project estimates and delivery with Tempo
Three-point estimating helps teams create more realistic plans, and Tempo provides the tools to execute them. Tempo’s suite of Jira-native applications integrates into a team’s existing workflows, helping them turn estimates into schedules and track progress – all from a single platform.
Capacity Planner enables project managers to visualize team availability and allocate resources based on workload and skill sets. After using three-point estimating to define task durations, managers can use Capacity Planner to schedule the right people at the right time, avoiding overloading anyone or leaving gaps.
Timesheets closes the loop by capturing time spent on tasks. This data allows teams to compare actual outcomes to original estimates, identifying patterns in estimation accuracy and refining future forecasts. Teams also track project evolution, pinpoint delays, and spot which types of work consistently diverge from planned durations.
Portfolio Manager offers a higher-level view, enabling teams to align project plans with strategic goals. Using Monte Carlo simulations, it provides visibility across multiple initiatives, helping teams prioritize resources, track progress, and adjust timelines as needed. This is especially valuable when managing complex programs that require accurate estimation.
Tempo’s tools support a continuous feedback loop: estimate, plan, track, and learn. By combining three-point estimating with Tempo’s functionality, teams can make smarter decisions and align projects with business goals from start to finish. Book a demo today.
