Analogous Estimating

Definition

Analogous estimating is a technique used in project management to estimate the duration or cost of a project by comparing it to similar past projects. This method leverages historical data and expert judgment, making it a quick and relatively low-cost way to generate estimates, though it may not always be as accurate as more detailed methods. This technique is especially useful when there's limited information available about the current project.

5 Must Know Facts For Your Next Test

1. Analogous estimating is often used in the early phases of project planning when detailed information is scarce.
2. This method relies heavily on the accuracy and relevance of historical data from past projects, which can affect the reliability of estimates.
3. While quicker and less expensive than other estimation techniques, analogous estimating can lead to inaccurate predictions if not used carefully.
4. It is most effective when the projects being compared are similar in nature, scope, and context to the current project.
5. Analogous estimating may be supplemented with expert judgment to enhance accuracy and adjust for unique project factors.

Review Questions

• How does analogous estimating support effective project planning in the early stages?
  • Analogous estimating plays a crucial role in early project planning by providing quick and reasonably informed estimates based on similar past projects. This allows project managers to set preliminary budgets and timelines even when detailed information is not yet available. By referencing historical data, teams can make informed decisions that guide the initial phases of project development, while remaining flexible for adjustments as more information becomes available.
• Compare and contrast analogous estimating with parametric estimating regarding their strengths and weaknesses.
  • Analogous estimating offers the advantage of speed and ease of use since it relies on historical data from similar projects. However, its accuracy can be compromised if past projects are not closely aligned with the current one. In contrast, parametric estimating uses statistical relationships and can provide more precise estimates based on variable data, but it requires more detailed information and can be time-consuming. Both methods serve important roles depending on the project's complexity and available data.
• Evaluate how the use of analogous estimating can impact stakeholder expectations during project execution.
  • The use of analogous estimating can significantly shape stakeholder expectations by providing them with an initial understanding of project scope, cost, and timeline based on previous experiences. However, if these estimates turn out to be overly optimistic or inaccurate, it can lead to disappointment or mistrust among stakeholders. Therefore, it's essential to communicate that these estimates are based on historical data and that actual outcomes may vary as the project progresses. This transparency helps manage expectations while allowing for adjustments as new information arises.

Related terms

Expert Judgment: The process of using the expertise and experience of individuals or groups to make informed decisions or estimations in project management.

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

Top-Down Estimating: A budgeting technique that involves estimating the overall budget for a project and then breaking it down into smaller components, often using past projects as a reference.