Analogous estimating in project management

Analogous Estimating is one of the techniques used in project management to estimate the duration, cost, or resources required for a project. This method involves using historical data from previous, similar projects as a reference to estimate the parameters of the current project. The key benefit of analogous estimating is that it allows for quick, high-level estimates, especially in the early stages of a project when detailed information may not be available.

Estimation techniques are crucial for planning project timelines, budgets, and resources effectively. As part of CAPM training at CertifyEra, participants learn key estimation methods like analogous, parametric, and three-point estimating. These techniques provide the skills to make accurate predictions, manage uncertainties, and ensure projects are completed successfully. By mastering estimation, learners build a strong foundation for efficient project planning and execution.

Here’s a detailed breakdown of Analogous Estimating:

1. Definition and Overview

Analogous estimating, also known as top-down estimating, involves using the actual results of previous projects that are similar in nature and scope to estimate the current project. This method uses historical data and expert judgment to make reasonable predictions about the project’s outcomes.

Since the project is assumed to be similar to past projects, the historical data from those projects (e.g., time, cost, or resource usage) is adapted and applied to the new project. It’s one of the fastest and least expensive estimating techniques, but it comes with a degree of uncertainty because it relies on the assumption that past projects will behave in the same way.

2. When to Use Analogous Estimating

Analogous estimating is typically used in the following situations:

• Early Stages of the Project: When detailed information about the project is not available, and quick estimates are required.
• Similar Past Projects: When historical data from previous, similar projects is available.
• Time or Budget Constraints: When there is limited time or resources for conducting more detailed estimating methods like parametric or bottom-up estimation.
• High-Level Estimates: To provide a rough order of magnitude (ROM) estimate of the project’s cost, duration, or resources required.

It’s often used for initial project planning, feasibility assessments, and when a quick comparison of options or scenarios is needed.

3. Process of Analogous Estimating

The process for conducting analogous estimating typically follows these steps:

a) Identify Similar Projects

• Review historical project data and identify past projects with similar scope, complexity, and deliverables.
• Consider projects with similar team sizes, resource types, and technological requirements.

b) Collect Historical Data

• Collect and examine data from the chosen similar projects, including:
  • Actual project duration, costs, and resource usage.
  • Any issues faced, lessons learned, and risk factors that could affect the estimate.
  • Details such as the size of the project, project type, and complexity.

c) Analyze the Data

• Adjust the historical data to fit the specific requirements and context of the current project.
• Ensure that the parameters and scope of the previous projects are similar enough to make valid comparisons.

d) Expert Judgment

• Involve project experts and stakeholders in analyzing the data and making adjustments based on their experience and understanding of the current project.
• Expert judgment helps to account for any differences between the previous and current projects that might impact the estimates.

e) Apply Adjustments

• Adjust the estimates based on any key differences between the previous project and the current project (e.g., different team members, new technology, regulatory changes).
• Use these adjusted figures to estimate the duration, cost, and resource requirements for the current project.

f) Provide the Estimate

• The final output is the estimated value for time, cost, or resources, along with a confidence level or range of possible outcomes.

4. Advantages of Analogous Estimating

Analogous estimating offers several advantages:

• Speed and Efficiency: Analogous estimating is faster than other methods like parametric or bottom-up estimating. It’s ideal for projects that need to make quick decisions or when there’s limited information available.
• Cost-Effective: This technique does not require extensive effort or resources to implement, making it a cost-effective option.
• Use of Existing Data: It allows project managers to leverage past experience and historical data, which can help in decision-making and forecasting.
• Useful for High-Level Planning: It is useful in the early stages of project planning when detailed information is unavailable or when the project is still in conceptualization.

5. Disadvantages of Analogous Estimating

While analogous estimating offers advantages, it also has some limitations:

• Inaccuracy: The estimates may not be precise, especially if the previous projects are not very similar or if there is not enough historical data. It relies on the assumption that the future project will behave similarly to past ones, which may not always be the case.
• Lack of Detail: This method only provides a rough estimate, which may not be adequate for projects that require detailed planning and accuracy.
• Dependence on Historical Data: The accuracy of the estimates is heavily reliant on the quality and relevance of the historical data used. If past projects were poorly documented or mismanaged, the estimates could be flawed.
• Bias: Expert judgment, while valuable, can sometimes be subjective, introducing bias or over-reliance on prior experiences that may not be applicable.

6. Examples of Analogous Estimating

Here are some examples where analogous estimating could be used:

• Construction Projects: If a project team is constructing a building, and they previously built a similar structure, they can use the historical data (duration, cost, resources) from the previous building project to estimate the time and costs for the new one.
• Software Development: If a software development team completed a project of similar size and complexity, they can use historical data to estimate the duration and resources needed for a new software application.
• Event Planning: For organizing conferences or events, past event data (budget, time, resources) can be used to estimate the logistics and costs of a similar upcoming event.

7. When Not to Use Analogous Estimating

Analogous estimating may not be ideal in the following cases:

• Unique Projects: If the current project is significantly different from past projects, analogous estimating may provide inaccurate results.
• Lack of Historical Data: If relevant historical data is not available or the past data does not align with the new project’s scope and conditions.
• Highly Complex or Large-Scale Projects: For very large or complex projects, a more detailed and accurate estimating method such as parametric estimating or bottom-up estimating might be more appropriate.

8. Conclusion

Analogous estimating is a powerful tool in project management that can provide quick and high-level estimates, especially when there is limited information or the project is in the early stages. However, its accuracy depends on the quality and relevance of the historical data used. It is best suited for situations where a rough estimate is acceptable, and the project has similarities to past projects. By leveraging expert judgment and historical data, analogous estimating can help project managers make informed decisions early in the project lifecycle.