Analogous estimating

Definition

Analogous estimating is a technique used to estimate the cost or duration of a project based on the historical data of similar projects. This method relies on expert judgment and previous experiences to draw comparisons, making it particularly useful during the early phases of project planning when detailed information may not be available. The accuracy of this estimation technique greatly depends on the relevance and quality of the historical data used.

5 Must Know Facts For Your Next Test

1. Analogous estimating is typically less accurate than more detailed methods like bottom-up estimating, but it is quicker and less resource-intensive.
2. This technique is best applied when there are similar past projects available for comparison, allowing for more reliable estimates.
3. It is often used in the initial stages of project management to develop rough order-of-magnitude estimates.
4. The effectiveness of analogous estimating can be enhanced by refining historical data to account for differences in project scope or complexity.
5. As a project progresses and more detailed information becomes available, it is common to update the estimates using more precise techniques.

Review Questions

• How does analogous estimating compare to other estimating techniques like bottom-up estimating in terms of accuracy and application?
  • Analogous estimating tends to be less accurate than bottom-up estimating because it relies on generalizations from past projects rather than detailed breakdowns of individual tasks. While analogous estimating is faster and requires fewer resources, it is best suited for early project phases when specific details may not be available. Bottom-up estimating, on the other hand, involves detailed assessments of each component, leading to more precise cost forecasts but taking more time and effort to compile.
• In what scenarios would you recommend using analogous estimating over parametric estimating, and why?
  • Analogous estimating would be more appropriate in scenarios where historical data from similar projects is readily available but not sufficiently detailed for parametric modeling. This method excels in situations where quick estimates are needed for initial project assessments or feasibility studies. If past projects closely resemble the new one in scope and execution, analogous estimates can provide a fast way to gauge potential costs or durations without delving into complex calculations that parametric estimating entails.
• Evaluate how the choice of utilizing analogous estimating can impact project cost management practices and decision-making throughout the project lifecycle.
  • Choosing to use analogous estimating can significantly affect project cost management by setting initial expectations based on past performances. This method can streamline early decision-making processes by providing quick estimates, allowing stakeholders to assess project viability sooner. However, if the estimates are overly optimistic or pessimistic due to reliance on potentially outdated or irrelevant data, it can lead to budgeting issues later in the project lifecycle. As projects evolve, failing to refine these estimates with more accurate techniques can undermine financial controls and ultimately impact project success.

Related terms

Parametric estimating: A statistical technique that uses historical data and mathematical relationships to calculate cost estimates based on variables.

Expert judgment: The process of leveraging the knowledge and experience of individuals with expertise in a specific area to make informed decisions or estimations.

Cost baseline: The approved version of the project budget that includes all authorized expenditures, serving as a reference for monitoring and controlling costs.