Parametric Cost Estimating
Parametric cost estimating uses a statistical relationship between historical data and other variables to calculate a cost estimate for project work.
Explanation
Parametric estimating uses an algorithm or mathematical model to estimate costs based on historical data and project parameters. For example, if historical data shows that a square foot of construction costs $200, and the project requires 10,000 square feet, the parametric estimate would be $2,000,000.
The accuracy of parametric estimates depends on the sophistication and reliability of the underlying model and the data used. This technique can be applied to an entire project or to parts of a project, and it can be used in conjunction with other estimating methods.
Parametric estimating can produce higher levels of accuracy than analogous estimating depending on the maturity of the model and the data. It is most reliable when the historical data used to develop the model is accurate, the parameters used in the model are readily quantifiable, and the model is scalable.
Key Points
- •Uses statistical relationships and mathematical models
- •Accuracy depends on the quality of the underlying model and data
- •Can be highly accurate when the model is mature and data is reliable
- •Scalable across different project sizes
Exam Tip
Parametric estimating uses a unit rate multiplied by quantity (e.g., cost per line of code multiplied by number of lines). It is more accurate than analogous when the model is sound.
Frequently Asked Questions
Related Topics
Analogous Cost Estimating
Analogous cost estimating uses the cost of a previous, similar project or activity as the basis for estimating the cost of the current project or activity.
Bottom-Up Cost Estimating
Bottom-up cost estimating involves estimating the cost of individual work packages or activities and then aggregating those estimates to arrive at a total project cost.
Estimate Costs
Estimate Costs is the process of developing an approximate monetary assessment of the resources needed to complete project activities.
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Earned Value Management (EVM)
Earned Value Management (EVM) is a methodology that integrates scope, schedule, and cost data to assess project performance and progress objectively.
Burndown Chart
A Burndown Chart is a graphical representation of work remaining versus time in a Sprint or release, showing whether the team is on track to complete the planned work.
Resource Leveling
Resource leveling is a resource optimization technique in which adjustments are made to the project schedule to keep resource usage at or below a defined limit, often resulting in a longer project duration.
Risk Register
The risk register is a project document that records the details of individual project risks, including their identification, analysis results, response plans, and current status.
Stakeholder Mapping
Stakeholder mapping is the visual representation of stakeholder relationships, influence, interest, or other attributes using grids, matrices, or diagrams to support analysis and engagement planning.
Relative Estimation
Relative Estimation is an agile technique where work items are sized in comparison to each other rather than in absolute units like hours or days, providing faster and more accurate estimates.
Power/Influence Grid
The power/influence grid is a stakeholder classification model that groups stakeholders based on their level of authority (power) and their active involvement or ability to affect the project (influence).
Part of
Cost Management
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