Parametric Estimating

5 minutes 5 Questions

Parametric estimating involves using statistical modeling to make predictions. In this method, characteristics of the project (parameters) are represented in a mathematical model to predict project costs, resources, duration etc. The accuracy of the model depends on the quality and relevance of the data used. This method works best when the project parameters are quantifiable and can be reliably forecasted through the model. For instance, cost per square foot to build a commercial building.

Guide: Parametric Estimating in CAPM Estimation Techniques

Parametric Estimating:
Parametric Estimating is a technique used in the Cost Estimating and Assessment Guide to predict a project’s cost and duration through statistical modeling. By linking various project parameters to the cost and duration, one can quickly gauge the impact of change in any parameter on the project’s outcome.

Importance:
Parametric estimation plays a critical role in project management and cost estimation as it helps in predicting the cost and timeframe in a statistically significant manner. It also accounts for risk and uncertainty, thereby providing a more accurate and reliable estimate.

How It Works:
Parametric estimating works by establishing a statistical relationship between historical data and other variables (or parameters). For instance, you might calculate the cost of painting a room by determining the cost per square foot and the size of the room.

Responses to Questions about Parametric Estimating in Exams:
When answering questions about parametric estimating in exams, ensure to first explain what the approach is and emphasize its importance in managerial decision-making. Then, detail how it works, being sure to include relevant examples to demonstrate your understanding.

Exam Tips:
1. Understand the basic formula used in parametric estimating and be ready to apply it in situational problems.
2. Look out for words like 'parameters', 'variables' or 'statistical relationship' in the exam question – these are clues that parametric estimating may be the answer.
3. Always clarify how the data used in the estimation is obtained and reference any assumptions made.
4. The best answers will not only identify the cost/duration of a project but also explain how changes in input parameters can affect the estimate.

Test mode:

Exam (Timed)

Practice (With explanations)

Start practice test

Question 1

A project manager is estimating the cost of a landscaping project. The project will cover 5000 square feet and with each square foot costing $2.5 as per past experience. There's also a 10% contingency budget expected. What's the total estimate using parametric estimating?

$10000 $15000 $12500 $13750

Correct Answer: $13750

First, you should calculate the cost of the project without the contingency by multiplying the size of the project in square feet by the cost per square foot. That is 5000 square feet times $2.5 per square foot, giving a total of $12500. Then, calculate the contingency budget by multiplying the cost without the contingency by the percentage of the contingency, which is 10 percent. This results in $1250. By adding the cost without the contingency and the contingency budget, the total cost of the project is $13750. The other answers are wrong: $12500 is calculated without the contingency budget, $15000 is greater than the correct result, and $10000 is less than the total cost even without contingency.

Question 2

You are tasked to estimate the cost of a window installation project. Each window costs $250 to install based on previous projects. 20 windows are to be installed and there's an expected 5% contingency cost. What is the best estimate using parametric estimating?

$5250 $5000 $4000 $4500

Correct Answer: $5250

The cost of installing each window is $250. So, for 20 windows it would be $250 multiplied by 20, which equals to $5000. However, there is also an additional 5% contingency cost. 5% of $5000 is $250. Adding that to the initial estimate, we get a total cost of $5250. The answer $5000 didn't account for the contingency cost, the answer $4500 is a total lesser than the base cost without even accounting for the contingency, and $4000 is even lesser than that, all of which are incorrect.

Question 3

A software company is estimating the time required for code review using parametric estimating. There are 10 modules and each module takes approximately 3 hours for review. Including a 10% contingency time for unplanned events, what would be the best estimate for the task?

33 hours 31.5 hours 36 hours 30 hours

Correct Answer: 33 hours

To calculate the total time for review, multiply the number of modules by the time it takes for each module: 10 modules * 3 hours/module = 30 hours. This gives the estimated time without considering any unplanned events. But the question mentions a 10% contingency time for unplanned events. 10% of 30 hours is 3 hours. Therefore, the best estimate for the project considering the contingency time would be: 30 hours + 3 hours = 33 hours. The other answers are incorrect because they either ignore the contingency time (30 hours), overestimate it (36 hours), or underestimate it (31.5 hours).

Go Premium