Definition
Parametric estimating is a quantitative technique used in project management to predict costs, durations, or resource requirements based on historical data and statistical relationships. This method relies on mathematical models and unit-based calculations, making it more accurate than rough estimates but less detailed than bottom-up estimating.
For example, if past data indicates that constructing one kilometer of road costs $500,000, then a 10-kilometer project can be estimated at $5,000,000 using parametric estimating. This approach is commonly used in construction, manufacturing, and software development for cost and time forecasting.
Advantages
✔ More Accurate Than Analogous Estimating – Uses real data rather than subjective judgment.
✔ Scalable & Repeatable – Can be applied to various projects with similar characteristics.
✔ Time-Efficient – Faster than detailed bottom-up estimating.
✔ Helps Standardize Estimation Process – Creates consistency across projects.
Disadvantages
✖ Requires High-Quality Historical Data – If past data is unreliable, estimates may be inaccurate.
✖ Not Suitable for Unique or Complex Projects – Works best for repetitive tasks, not one-time innovations.
✖ May Not Account for Unexpected Variables – External factors like inflation or market fluctuations can affect accuracy.
