Three-point estimation is a project management technique used to improve the accuracy of estimates. It involves three different estimates for a task: the optimistic estimate (O), the pessimistic estimate (P), and the most likely estimate (M). This method helps account for uncertainty and variability in project tasks. To calculate the expected value, the formula used is (O + 4M + P) / 6. This weighted average gives more importance to the most likely scenario while still considering the extremes. By using three-point estimation, project managers can make more informed decisions and better plan for potential risks in their projects.