Question

a. Compare 3 estimating techniques: Analogous, Bottom-up and Parametric. Explain the circumstances which determine the method you should use each type as your primary method b. According to PMI (2017, p. 245) There are two common ways to estimate cost and duration using the 3-poin average of the optimistic (O), most likely (M), and pessimistic (P) estim estimate (0+M+P)/3. The second way is based on the Beta distribution that puts more weight on the most likely. Mathematically, your beta estimate - (0+4M+P)/6. Using the following, calculate the two estimates of duration 0-4, M-6, P-11. Explain the difference in the answers. How would you decide which method to use? t method. The first is the triangular distribution where the estimate is based on the ates. Mathematically, Your

Answer 1

These three estimation methods represent a hierarchical structure where analogous estimating represents the least accurate method, and bottom-up estimating represents the most precise method.

Analogous Estimating

This technique is employed to estimate the project cost when limited detail about the project is available. Therefore, this technique does not provide a very reliable estimation. The primary benefits of this technique are its lower cost and quick results.

In analogous estimation, the cost of the project is estimated by comparing it with similar projects previously completed by your organization. Here, you will look into your organization’s historical records (i.e., an organizational process assets) for prior completed projects similar to your own. You will select the project which is closest to your project and use your expert judgment to determine the cost estimate of your current project.

The analogous estimating is also known as the top-down estimating.

Parametric Estimating

Like analogous estimating, parametric estimation uses historical data to calculate cost estimates; however, it also utilizes statistical data. It takes variables from similar projects and applies them to the current project.

For instance, in a previous project, we take the cost of concrete per cubic meter, then calculate the concrete requirement for the current project and multiply it with the cost obtained from the previous project. This will provide the total cost of concrete for your current project.

In the same way, you can calculate the cost of other parameters (men, materials, and equipment).

The accuracy of this process is better than the analogous estimation because it employs more than one data set.

Bottom-up Estimating

The bottom-up estimating technique is also called the “definitive technique.” This technique is the most accurate, time-consuming, and costly technique for estimating the cost of a project. Here, the cost of every single activity is determined with the highest level of detail at the bottom level and then rolls up to calculate the total project cost.

Here, the total project work is broken down into the smallest work components. Each component cost is estimated, and finally, it is aggregated to determine the project’s cost estimate.

Analogous Estimation

• It is the fastest technique to estimate cost but least accurate.
• This technique can be applied with limited information available about the project.

Parametric Estimation Bottom up Estimation

• This technique uses the statistical relationship between historical data and variables; e.g., cost of painting a wall per square foot.
• It is more accurate than the analogous estimation.

Bottom up Estimation

• This is the most accurate technique of all the methods presented.
• This technique can only be used when every detail about the project is available.
• This is a time-consuming and costly technique but gives the most reliable and accurate result.

It is important to note that the more accurate a method, the costlier and time consuming it becomes. Based on this reason, it is not always advisable to use bottom-up estimating when you are short on time or resources, even though it might be the most accurate.