Estimating

Estimating is the process of inferring the value of an unknown quantity from data, models, or prior information. In statistics and science, estimation typically produces a point estimate—a single best guess—and an interval estimate that expresses uncertainty. Estimation is used across disciplines, including statistics, engineering, economics, and project management, to quantify parameters such as population means, model coefficients, costs, or durations.

In statistics, common estimation methods include frequentist approaches such as maximum likelihood estimation and the method of moments, and Bayesian approaches that combine data with prior beliefs. Point estimates may be augmented by interval estimates, such as confidence intervals or credible intervals, which reflect uncertainty about the true value and depend on model assumptions and sample size.

In applied settings, estimators are implemented with parametric models (assuming a functional form) or nonparametric methods. Techniques include regression, least squares, regularization, and, in project management, estimation methods like bottom-up and top-down estimates, analogy-based estimates, parametric models, and three-point estimates using PERT.

Accuracy and reliability depend on data quality, model specification, and sample size. Key concerns include bias, variance, measurement error, and model misspecification. Validation tools such as cross-validation or out-of-sample testing help assess predictive performance, while reporting should include measures of uncertainty (standard errors, prediction intervals).

Estimations support decision making by providing informed values and their uncertainty. It is distinct from forecasting, which emphasizes future observations, though both rely on similar methods. Limitations include potential bias and overconfidence if uncertainty is ignored.