As a thumb rule, the major difference between Analogous and Parametric Estimation is mathematical operations. Like, in parametric, we do more calculation while analogous is just an expert opinion.
PMP, CAPM, and other project management related certifications are always having some portion reserve for estimation techniques. Cost estimation and duration estimation are the most significant areas.
There are several techniques for estimations for a project like
- Expert Judgement
- Analogous Estimation
- Parametric Estimation
- Three-Point Estimation
- Bottom-up Estimation
- Group Decision / Data Analysis
- Decision Making
But, here in this blog, we will look at Analogous and Parametric Estimation as these two are most confusing at the exam.
Difference between Analogous and Parametric Estimation
Both techniques are mainly used for the cost and duration of any project through historical/previous data.
No calculations. Only we use historical data on the same project. It is just like an expert judgment. This only works if you analyze the same kind of projects, but if you don’t have previous data, then this technique is not applicable.
Advantages of Analogous Estimation
- Most simple technique without any hectic calculations
- Works best if only a few details are available
- Quick and fast output
- Lest costly and not time-consuming
The disadvantage of Analogous Estimation
Accuracy is a question unless you have a history of the same project.
Analogous Estimation is done at initial stages of projects where management has to decide either to go for this project or not – or management is looking for a quick suggestion from a Project Manager.
Example of Analogous Estimation
We want to calculate how much concrete is required to build a house. For this, you need to have high-level historical data of a similar house.
Parametric Estimation is where we use Estimation at the parameter level. It involves mathematical calculations and hence is considered more accurate than Analogous Estimation. Here, we do unit wise calculations of cost, duration, man-hours, etc.
Advantages of Parametric Estimation
High accuracy than Analogous
Disadvantages of Parametric Estimation
It’s a time taking one as you need to calculate unit wise
Example of Parametric Estimation
We want to calculate how much concrete is required to build a house. For this, we need to know how much total unit meter the area is? Previous productivity rates to estimate the duration and to calculate human resources and the cost.
Flow Chart for Cost Estimation Techniques
You can observe how a process for cost estimation for a project goes through different phases.
Analogous estimates are not based on activity level costing, and hence less time is required resulting in a rough idea. Parametric, on the other hands, needs unit wise costing resulting in a time-consuming activity. Bottom-up estimating is used with any of the above analogous or parametric estimations where we estimate individual tasks and later on add all to get project estimates.
What is the major difference between Analogous Estimation & Bottom-Up Estimation Techniques?
Analogous is quick, less costly to create and less accurate while bottom-up is time taking and much more costly and accurate than analogous.
What tools and techniques are used in Parametric Estimation?
Statistically relationship between Historical data and other variables. There are two ways to create parametric estimates that is Regression Analysis and Learning Curve.
Analogous Estimation is not accurate but why still we use it?
It is helpful for the initial screening of projects to be evaluated. It quick and cost-saving ultimately as we use only expert judgment in it and no team buy-in is required.