## Project Estimation Techniques

**Project Estimation** is one of the most important part of project management. Good Project Estimation is cardinal for the success of a project. **Project Estimation Techniques** are covered under both **Time Management and Cost Management Knowledge Areas** of PMBOK® Guide.

The Project Estimation Techniques described in PMBOK® Guide are universally applicable to all kind of projects. There are many other Project Estimation Techniques that are specific to a domain or industrial area. In this post we will talk about two universally applicable Project Estimation Techniques – **Analogous and Parametric Estimation**. We will define and differentiate between Analogous and Parametric Estimation.

In PMBOK® Guide Analogous and Parametric Estimation techniques are used for **estimating Duration & Cost**. If you are a PMP® aspirant, you should learn Analogous and Parametric Estimation in the context of Duration & Cost Estimation only. But these Project Estimation Techniques can be also used for estimating other project variables like Resource, Effort and Risk. You can perform Duration or Cost or any other Estimation by using these Project Estimation Techniques.

**Work Unit**. The Work Estimation can be There could be many different definitions of Work. However, we will use Project Management definition i.e.

**Work**

**as defined in**Work Breakdown Structure (WBS). E.g. Work could be a small Work Package or it could be an Entire Project or anything in-between.

### Definitions and Examples

#### Analogous Estimation

A technique for estimating the duration or cost of an activity or a project using

historical datafrom asimilaractivity or project.

PMBOK® Guide 5th Edition

**Example** – We want to estimate the duration required for painting a house. We can estimate the duration by using the **high level historic data of a similar house** that was painted across the street.

#### Parametric Estimation

An estimating technique in which an algorithm is used to

calculatecost or duration based onhistorical dataandproject parameters.

PMBOK® Guide 5th Edition

**Example** – We want to estimate the duration required for painting a house. We can estimate the duration by **multiplying** **total area of the house to be painted with duration required per unit area**. The per unit area duration can be determined by using **historic data from any previous house painting project**.

### Difference between Analogous and Parametric Estimation

PMP® exam is full of tricky questions. Some of these tricky questions are related to Analogous and Parametric Estimation Techniques. E.g The questions might ask you to ascertain what estimation technique is being used in the given project scenario. If you know the difference between Analogous vs. Parametric Estimation, you can easily solve these questions.

Many people believe that the difference between Analogous and Parametric Estimation is the usage of **Historical Data**. The is a fallacy. Refer to the definitions of Analogous and Parametric Estimation. It clearly says that Historical Data is used in both the Project Estimation Techniques. This is not the difference but a similarity.

Let us look at the following table to understand the difference between Analogous and Parametric Estimation.

Analogous Estimation |
Parametric Estimation |
---|---|

Analogous Estimation uses historic data from a previous Similar Project. |
Parametric Estimation uses historic data from a previous project to prepare a mathematical or statistical model. |

It is usually done in early phases of the project when detailed data is not available. |
It can be done only when detailed data is available. |

It usually does not produce very accurate estimates. The accuracy of the estimates also depends on expertise and experience of the person who does the estimation. |
It usually produces more accurate estimates. The accuracy of the estimates depends on the sophistication of model used and details available in the historical data. |

It is usually less costly and time consuming to perform Analogous Estimation. |
It is usually more costly and time consuming to perform Parametric Estimation. |