Cost estimating methods and parametric applications

This presentation will briefly discuss the three methods of estimating; analytical, analogous and parametric before studying parametric cost and schedule estimating in more depth. It will consider the benefits of generating parametric estimates early in the project life cycle and other applications of parametric estimating when little information is available.

Parametric cost estimating models are flexible tools which bring engineering, scientific and mathematical rigour to cost and schedule estimating, but great tools alone will not keep programs affordable. Tools must be applied as part of a credible process if estimates and analyses are to be accepted.

Complex major projects suffer from two basic problems: the project sponsors often struggle to specify the project effectively, and project managers find themselves wrestling with unpredicted cost or schedule overruns.

Parametric estimating has been used around the world during the early stages of a project life cycle. It has been used to explore concept options, set early budgets and conduct independent cost estimates (ICE) with minimal information.
This paper will explore the development of this robust cost forecasting solution, its applications and benefits.