What is Parametric Estimating?

Parametric estimating can seem intimidating to anyone who is looking to get into Project Management. Parametric estimating is an estimation process that determines the expected cost of a project. It is a prerequisite to sitting for the PMP(r). Let’s get started now to talk about parametric estimating and its uses.
Photo by fauxels at Pexels
Parametric Estimating
Parametric estimating uses historical data to estimate project costs and establish other variables. It is a method to determine the cost and time it will take to complete a project.
Parametric estimating is a tool that every project manager must use to estimate costs. It is an established tool in the PMI cost estimation process. Although it is widely used by project managers, the form of it varies for different projects. It requires that you do your research on ongoing projects and compare it with past project information. It can be accurate, but it all depends on how reliable and detailed the initial data is.
Parametric Estimating versus Other Project Estimating Techniques
Estimation refers to the process of estimating the project’s cost and effort. Parametric Estimating is not the only cost estimation technique. There are four others:
Analogous Method: This method takes values and parameters from other projects to estimate the cost or length of the current project. It uses similar work but there might be deviations due to varying circumstances. The analogous method is not as accurate as other estimating methods.
Bottom-Up Method. This method estimates each component of work separately. The individual costs are then summed up or rolled into an overall project estimate. This method is more accurate the more detailed and precise the individualistic activities.
Top-Down Estimating is: This method is an inverted version of bottom-up estimation. This method starts with the overall estimate and then divides it into tasks. It is susceptible to errors, however.
Three-Point Estimating : This method uses three estimates, pessimistic, optimist, and most likely, to estimate an overall medium cost. This method reduces the risk of inaccuracy by taking into account multiple possibilities and incorporating marginal safety.
These estimating techniques may become necessary over time for project estimation. Parametric Estimating is a middle ground. It offers a balance between analogous and button-up. Parametric Estimating does not estimate the entire task. Instead, it focuses on the parts that do eighty percent. Because there is less uncertainty, the method is simpler and takes less time to calculate the total cost and effort.
When to use Parametric Estimating
Parametric Estimating can be used in the early stages of design to give an overview of the total costs. This allows you to determine the total cost of the product based on its weight and measurements. Once you have an overview, you can estimate the time and resources required to complete the project.
Two conditions are required for the estimation to be valid. The first is when you have historical information from similar work. This allows you to use it for modeling. The second is when the modeling can be scaled, which means that the framework will remain the same regardless of how many units or work are added.
Remember that data must be accurate, including the methodology used and the hours required. Once all conditions have been met, it is easy to determine the parameters.
How to Use Parametric Estimating
For your convenience, the process has been further divided into these parts to make it easier to understand.