Processing system performance is improved while meeting power management constraints in a processing system by using activity factor headroom estimation. The method and system estimate the power consumption of the system from a model that relates measured activities at a present operating point to power consumption for any available operating point of one or more processors in the system. The method then chooses the operating point(s) with the highest performance among the available operating points that will still meet budgetary constraints or specific thresholds of power consumption. The budgetary constraints or specific thresholds may be dynamically adjusted, and the method will update the operating point(s) to maintain safe operation and maximize performance. The method provides the best performance for the executing workload while ensuring safe operation.