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Analogous Estimation
In the initial phases of a project, when not much details are available with PM for estimation, Analogous technique can be used. In analogous estimation, we refer to ACTUALS of similar kind activity which was done in past i.e. Historical data. Here we try to find out ANALOGY among the activity which needs to be estimated and some activity done in past. We just take the Actual of activity from historical data and assign same value as Estimation for new one.
For example - If in last project, a web page had taken 48 hours to be completed, the estimation for new project's web page development will be taken as 48 hours, irrespective of the details of web page that need to be developed.
Parametric Estimation
Here again we refer historical data, but this historical data will be taken as PARAMETER or variable to calculate estimates. The accuracy level of parametric kind of estimation is better than the estimations done using Analogous estimation.
For Example - In last project, a 10 Km long road was constructed in the budget of $20,000. Now in new project, we need to construct 15 kms of road. So we calculate that in last project if 10 km was constructed in $20,000, cost of 1 km = $200.
Now use this value as parameter to calculate estimate for new project = $200 X 15 = $30,000 is the estimate using Parametric estimation technique.
Three Point Estimation
Generally single point estimations are risker than 3 point estimate.
For example: If you are going to a destination and you have to give the time by when you will be there at destination what is more confident answer: 1) I'll reach by 10 AM 2) I'll reach between 10 to 10:15 AM. Similar concept is used in estimation of activities. Uncertainty and risk with single point estimate that I need 100 PDs to do this work is more than if we consider 3-point estimation for example, Most likely I will finish in 105 PDs (M), however I feel I should be able to finish in 100 PDs(O), at max I'll finish by 110 PDs(P). so using formula for Beta distribution tE = (tO + 4tM + tP) / 6, tE = (100+4*105+110)/6 = 105. This estimate is more certain and less riskier.