Three-point estimation: Difference between revisions

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The Three Point Estimation technique is based on statistical methods, and in particular, the Normal distribution. Three Point Estimation is the preferred estimation technique for IS projects. In Three Point Estimation we produce three figures for every estimate:

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* a = the best case estimate

* m = the most likely estimate

* b = the worst case estimate

The Three'''three-point Point Estimationestimation''' technique is based on statistical methods, and in particular, the Normal[[normal distribution]]. Three Pointpoint Estimationestimation is the preferred estimation technique for IS projects[''What is "IS"??'']. In Threethree-point Point Estimationestimation we produce three figures for every estimate:

These values are used to calculate an E value for the estimate and a Standard Deviation (SD) where:

* ''a'' = the best case estimate

* ''m'' = the most likely estimate

* ''b'' = the worst -case estimate

These values are used to calculate an ''E'' value for the estimate and a Standard[[standard Deviationdeviation]] (SD) where:

E = a + (4*m) + b / 6<br />

SD = (b - a)/6

: ''E'' = ''a'' + (4*''m)'' + ''b'' / 6<br />

E is a weighted average which takes into account both the most most optimistic and pessimistic estimates provided and SD measures the variability or uncertainty in the estimate.

: SD = (''b''&nbsp;&minus;&nbsp;''a'')/6

''E'' is a [[weighted average]] which takes into account both the most most optimistic and pessimistic estimates provided and SD measures the variability or uncertainty in the estimate.

To produce a project estimate the Project Manager:

To produce a project estimate the Projectproject Managermanager:

* Decomposes the project into a list of estimable tasks, i.e. a Work Breakdown Structure

* Estimates each the E value and SD for each task.

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We then use the E and SD values to convert the project estimates to Confidence Levels as follows:

* Confidence Levellevel in E value is approximately 50%

* Confidence Levellevel in E value + SD is approximately 70%

* Confidence Levellevel in E value + 2 *&times; SD is approximately 95%

* Confidence Levellevel in E value + 3 *&times; SD is approximately 99.5%

* IS use the 95% Confidenceconfidence Levellevel, i.e. E Value + 2 *&nbsp;&times;&nbsp;SD, for all project and task estimates [''What is "IS"???'']

== See also ==