Three-Point Estimates have a key role when it comes to the subject of Project Management. Effort estimations are valuable though only if they are accurate. That is why the risk that is involved with that original assessment has to be calculated into the overall projection. When you are talking about Three-Point Estimates and how they relate to Project Management, you have to look closely at three distinct areas.
What is the outcome most likely to be? When you take the duration of the selected event into consideration there are going to be certain types of resources that you know will be there. For example you can estimate how productive something will be based on the schedule of activities for it. You will also need to factor in those variables that you can’t control though. There is no doubt some will arise that complicate the natural flow of things.
Take a close look at the best possible outcome of the event. This is going to be viewed from the attitude of someone with optimism. These results are going to show you what can occur if everything that can go right with the process actually does.
Next you want to take a close look at the worst possible outcome for the event. You want to be a pessimist and go from the angle that nothing is going to go well. What is the worst that can happen if absolutely everything that could possibly go wrong for you does?
Using these areas of the Three-Points Estimates, you can get realistic Project Management results. One formula is to take the average you get after all three of these possibilities are considered. However, there are more sophisticated approaches, e.g. (o + 4m + p)/6 where o is the optimistic estimate, m the most likely estimate, and p the pessmistic estimate. As an example, if a developer estimates that his part of the code would need 5 days optimistically, 10 days most likely, and 30 days pessimistically, then the three-point estimate would be (5 + 4*10 + 30)/6 = 12,5 days. This estimate is going to be more accurate than you will get if you hope that one of the possibilities will be the one that actually takes place.
This term is defined in the 3rd and the 4th edition of the PMBOK.