Analogous and Parametric Estimating Techniques

In Project planning, after finished with define scope, create WBS, Sequence activities, Estimate activity resources and Estimate Activity duration it’s time to Cost Estimation for it.

Estimate is an approximate number for resource, activity, cost etc., while Budget is an approved estimate with addition of reserve.

Cost Estimation Techniques:

Analogous Estimating:

Analogy means similar. Analogous Estimating technique use the historical data of past projects or activity which are similar type of it to estimate current project. In past, if organisation has performed similar type of project then parameters from that project like duration, cost and risk can be consider here to estimate.

This technique is easy and less costly. When less detail of project is available to estimate then project manager can be used this estimating technique. This technique is less accurate and less time consuming. Here, the estimation is as much accurate as much the past project activity is closed to the project.

If in past, organisation has done “Online hotel booking system” project in 3 months then they estimate same project of 3 months as per the past experience.

Parametric Estimating:

Parametric Estimating technique use the historical data or parameters from past project to estimate the project. It depends upon the statistics find out from the parameters and with the use of other variables. It calculates the result from the available parameters and then estimate the current project.

For example, if in past we produce 10 'X' products in a day then how much time it take to produce 1000 same products? So from this equation calculated time is calculated and estimate the project. Here, the estimation is as much accurate as much the calculated result and assumptions are correct. Parametric estimating is more accurate then Analogous Estimating.