Question:
Estimation works in many convoluted ways in practice. It is always a tussle between the top management overseeing the project and the project team.
Top management wants to reduce the estimates, whereas the project team wants to pad the estimates to give themselves more breathing room and safety in case things go wrong.
Carefully read the interesting stories in Estimation Games People Play by clicking on this link. How does this relate to your experience in your current or past job? Have you had similar experiences?