^ [[Appendix C - Project Management Tools & Techniques]] # C.8  Three-Point Estimates The Three-Point Estimate is commonly used, in conjunctions with Network Diagrams, to provide a weighted average of activity duration or cost. It is primarily a quantitative risk assessment technique that makes use of a stochastic approach rather than a deterministic one (e.g. single point estimates). The expected duration/cost and standard deviation of a project’s duration or cost is calculated based on three data points, namely an optimistic estimate of duration or cost, a most likely estimate and a pessimistic estimate. These estimates are then weighed to provide a weighted average of the effort, cost or duration. In addition, these estimates can be used to calculate a standard deviation, to estimate confidence levels of the weighted average per activity, and to build simple statistical models of a task’s time and cost. This method can be applied to forecast and mitigate risk and to assign buffers/contingencies to tasks. Nowadays, numerous Project Management Software, can perform automated calculation of the above through modelling and simulation (e.g. by using the Beta-PERT distribution). Involving experts increases the accuracy of the three-point estimates and reduces the degree of uncertainty of the project. ___ Spanish Guide: [[C.8 Estimación por Tres Puntos]] <-- [[C.7 Effort and Cost Estimates]] --> [[C.9 Decision Trees]]