Analogous Estimating

5 minutes 5 Questions

Analogous estimating, also known as top-down estimating, involves using the data of previous, similar projects as the basis for estimating the cost, duration or effort of the current project. It is most reliable when the previous projects are similar in fact and not just in appearance, and the individuals preparing the estimates have the needed expertise. Though it is not as accurate as other methods, it is less costly, and less time consuming which makes it a perfect choice for a quick or high-level overview of the project.

Analogous Estimating: A Complete Guide

Analogous Estimating is a critical concept in project management that allows managers to predict project timeframes and costs based on past projects with similar attributes. Understanding the principles and techniques of Analogous Estimating is vital for various certification exams.

What is it?
Analogous Estimating, also known as Top-Down Estimating, is a technique for estimating the cost and duration of a project using historical data from similar past projects.

How it works?
In this technique, the project manager identifies past projects with similar characteristics, takes their actual costs and duration, and adjusts them to match the current project's specifics. Various factors could impact these adjustments, including project size, complexity, and risk.

Exam Tips: Answering Questions on Analogous Estimating
When answering exam questions, remember that Analogous Estimating:
- Relies on historical data, so if a question mentions past similar projects, Analogous Estimating should come to mind.
- Is less accurate than other methods like Parametric Estimating, due to its high-level nature.
- Is quick and inexpensive, making it suitable for early stage estimates.
- May not be accurate for unique projects with no past comparisons.

Being able to identify when and why to use Analogous Estimating in given scenarios can play a significant role in correctly answering exam questions.
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CAPM - Analogous Estimating Example Questions

Test your knowledge of Analogous Estimating

Question 1

You are project manager and your upcoming project is twice as complex as a previous similar project which took 4 months and $45000. How would you make an analogous estimate of the cost and duration?

Correct Answer: You would estimate that the new project would take 8 months and $90000.

The new project is twice as complex as the previous project that took 4 months and $45000. So, you would expect both the time and the cost to double. Hence, the new project would take about 8 months and $90000. Answer 155259 is incorrect because experience can improve efficiency, but it won't drastically reduce the project duration to half and budget to half when the complexity is doubled. Answer 155260 is incorrect because it does not account for the increase in the complexity of the project, so it should take more time and more budget. Answer 155261 is not correct because, although it accurately estimated the cost to be twice that of the previous project, it incorrectly asserted that complexity does not affect the duration.

Question 2

You are a project manager estimating the cost of a new automotive product. You have data from a similar project which cost $350,000 and took 3 months. This project is expected to have 30% more complexity. How should you use this data for an Analogous Estimate?

Correct Answer: Increase the cost of the previous project by 30% to account for the higher complexity.

Analogous estimating in project management is based on drawing parallels between similar projects. If a new project is estimated to have 30% more complexity than a similar past project, logically, the cost should also proportionally increase, making the first answer the correct one. The second answer is incorrect because it fails to account for the increased complexity of the new project. The third answer is not feasible as despite a team's gained experience, increased complexity does not generally lead to decreased cost. The fourth answer is wrong because it proposes a method that doesn't factor in the complexity and applies a flat rate based on duration which is not the right way to estimate costs in project management.

Question 3

You are tasked with developing a new digital marketing campaign. The last similar campaign cost $45,000 and took 90 days with a team of 5. This time, your company hired a marketing agency that offers a seamless solution, and the team size remains the same. How would you adjust your Analogous Estimating?

Correct Answer: Cost and time could decrease due to the efficiencies brought in by the agency.

The best answer is 'Cost and time could decrease due to the efficiencies brought in by the agency'. This is because the introduction of a marketing agency that offers a seamless solution might bring efficiencies to the project, which could likely result in both a reduction in cost and time spent. Similar projects' past performance is utilized in analogous estimating. The other answers are incorrect. 'Cost would increase due to the hiring of the agency': The agency is brought in to increase efficiency, so while there is a cost to hiring them, the overall cost may decrease due to their expertise. 'Estimate will remain the same regardless of the improved technology': This is invalid because analogous estimating is flexible and considers any new efficiencies or changes that can affect the estimate. 'It's impossible to estimate based on previous project data': This is incorrect as the essence of analogous estimating is using past projects to estimate future ones.

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