Analogous estimating

Definition

Analogous estimating is a project management technique used to estimate the cost or duration of a project by comparing it to similar past projects. This method relies on historical data and expert judgment to provide a rough estimate, making it particularly useful during the early stages of project planning when detailed information is not yet available.

5 Must Know Facts For Your Next Test

1. Analogous estimating is often quicker and less resource-intensive than other estimation methods, making it ideal for initial project planning.
2. This technique is most effective when there are several similar projects to compare against, enhancing the accuracy of the estimate.
3. While analogous estimating can provide valuable insights, its accuracy may vary significantly depending on how closely related the past projects are to the current one.
4. It is important to adjust estimates derived from this method based on the unique characteristics and risks of the new project.
5. Analogous estimating is commonly used in industries like construction, software development, and engineering, where historical data can play a key role in planning.

Review Questions

• How does analogous estimating differ from parametric estimating, and in what situations might each be used?
  • Analogous estimating focuses on comparing past projects with similar characteristics to make rough estimates, while parametric estimating uses statistical relationships based on historical data and variables to produce more precise calculations. Analogous estimating is best used during early project phases when less detailed information is available, whereas parametric estimating is more suitable when there are established metrics and data points that can be applied to the current project.
• What factors can impact the accuracy of an analogous estimate, and how can project managers mitigate these risks?
  • The accuracy of an analogous estimate can be affected by the relevance of the chosen past projects, differences in scope or complexity, and changes in market conditions since those projects were completed. To mitigate these risks, project managers should ensure they select closely aligned projects for comparison, adjust estimates for any significant differences, and incorporate expert judgment to refine the estimates based on current circumstances.
• Evaluate the role of analogous estimating in developing a cost baseline and its influence on overall project success.
  • Analogous estimating plays a crucial role in establishing an initial cost baseline by providing preliminary budget figures that help shape financial expectations for a project. A well-informed cost baseline allows for better resource allocation and aids in tracking project performance. However, if the initial estimates are inaccurate due to poorly chosen comparable projects or oversights in unique project requirements, this could lead to budget overruns or scope creep, ultimately jeopardizing overall project success.

Related terms

parametric estimating: A technique that uses statistical relationships between historical data and other variables to calculate an estimate for project costs or durations.

bottom-up estimating: A method where estimates are made for individual components of a project and then aggregated to form a total estimate for the entire project.

cost baseline: An approved version of the project budget that includes all authorized expenditures, serving as a reference point for measuring project performance.