Parametric estimating uses a statistical relationship between historical data and other variables (e.g., square footage in construction) to calculate an estimate for activity parameters, such as cost, budget, and duration.
What Is Parametric Estimating?
Parametric estimating is a technique used to estimate the cost of a project by using a mathematical model to relate project parameters to cost.
The most common parameters used in parametric estimating are project duration, project size, and project complexity.
Parametric estimating is often used in conjunction with bottom–up estimating, where the estimator begins with a detailed understanding of the project and uses that knowledge to develop a parametric model.
This approach is considered to be more accurate than top–down estimating, which relies on historical data and averages to predict the cost of a project.
The advantage of parametric estimating is that it can be used to estimate the cost of a project before all the details are known. This makes it a useful tool for planning purposes.
The disadvantage of parametric estimating is that it can be inaccurate if the parameters used in the model do not accurately reflect the actual project.
A parametric estimate is not a bid or a quote, but rather an educated guess based on a mathematical model. While it is not as accurate as a bottom–up estimate, it can be a useful tool for planning purposes.