Structural Health Monitoring (SHM) gained great attention due to its significant role in lowering the cost and time of monitoring and maintaining structures. Guided wave techniques are widely used to detect damage in structures due to its sensitivity to different changes in the structure. That makes it very reliable for inspection of large complicated structures for cracks, corrosion and different types of damages. Damage localization is based on determining the time for the signal to travel from the source to the damage and reflected back i.e. Time Of Flight (TOF). In this paper, finite element simulation is performed using ABAQUS/Explicit finite element software to study the damage size effect on the damage localization accuracy using the 3-point pulse-echo technique. A 5 cycle Gaussian tone-burst with 250 kHz central frequency is applied to simulate lamb wave propagation in an aluminum plate. The tangential displacement is recorded at the excitation and two subsequent points. Wigner-Ville Distribution (WVD) is used to eliminate noise and calculate the TOF based on its excellent time-frequency-energy distribution.