Historical Information for Parametric and Analogous Estimating

PMBOK v8 Definition

Historical information review involves examining data from past projects to develop parametric estimates or analogous estimates. Historical information may include project characteristics (parameters) to develop mathematical models to predict total project costs. These models can be simple (e.g., residential home construction based on cost per square foot) or complex (e.g., software development costing using multiple separate adjustment factors). Both the cost and accuracy of analogous and parametric models can vary widely.

Why It Matters for the Exam

This concept appears frequently in PMI exam questions about estimating techniques, specifically in the Planning Process Group. You will encounter it in questions asking you to differentiate between parametric estimating and analogous estimating, and in scenarios requiring you to select the appropriate estimating technique based on available historical data. The exam tests your understanding of how historical parameters serve as inputs for both techniques.

Key Points to Remember (for the exam)

• Core Concept: Historical information provides project characteristics (parameters) that serve as the basis for developing mathematical models to predict total project costs
• Two Techniques Using Historical Data: Parametric estimating and analogous estimating both rely on historical information, but use it differently
• Parametric Estimating Definition: Uses an algorithm to calculate cost or duration based on historical data and project parameters; uses a statistical relationship between historical data and other variables (e.g., square footage in construction)
• Analogous Estimating Definition: Uses parameters from a previous, similar project (duration, budget, size, weight, complexity) as the basis for estimating the same parameter for a future project
• Model Complexity Range: Simple models (cost per square foot) to complex models (multiple separate adjustment factors with numerous points within each)
• Accuracy Variation: Both the cost and accuracy of analogous and parametric models can vary widely
• Duration Calculation Example: Durations can be quantitatively determined by multiplying the quantity of work to be performed by the number of labor hours per unit of work (e.g., design project: number of drawings × labor hours per drawing)

Typical PMI Exam Example

A project manager is estimating the cost of a new residential construction project. The manager reviews historical information from 50 similar homes built in the same region and finds a consistent relationship of $200 per square foot. The new project is 2,500 square feet. Using this parameter, the manager calculates the estimated cost at $500,000. This is an example of parametric estimating using historical project characteristics.

PMI Exam Traps

• Trap: Confusing parametric estimating with analogous estimating

  • Reality: Parametric uses statistical relationships and algorithms with multiple data points; analogous uses a single similar project as a reference

• Trap: Assuming historical data guarantees accuracy

  • Reality: Both the cost and accuracy of analogous and parametric models can vary widely

• Trap: Thinking parametric estimating only applies to cost

  • Reality: Parametric estimating calculates cost OR duration based on historical data and project parameters

• Trap: Confusing the inputs of parametric vs. analogous estimating

  • Reality: Both use historical data, but parametric uses statistical relationships while analogous uses direct comparison to one similar project

Important PMI Connections

Quick Review Questions

1. What is the difference between how parametric estimating and analogous estimating use historical information?

2. A project manager has historical data showing that software development costs can be predicted using function points multiplied by a cost per function point, with adjustment factors for complexity. Which estimating technique is being used?

3. Why might the accuracy of a parametric model based on historical data vary widely between different projects?

4. In the context of duration estimating, how would a project manager calculate the duration of a cable installation project using historical parameters?

5. What types of project characteristics (parameters) from historical information can be used to develop mathematical models for cost prediction?

PMBOK v8 Reference

Section 2.6 - Estimating (Historical Information Review and Parametric Estimating subsections)