Project Management

Parametric Cost and Duration Estimation

last edited by: Pang DX on Dec 6, 2018 7:42 AM login/register to edit this page

Parametric Estimation is an estimating technique which uses bottom-up approach to calculate estimated cost and duration based on inputs from historical data and project parameters. It is calculated based on mathematical relationship between historical data and other variables such as product output per day and cost per unit.

In a simple example, in a project task of configuring final specifications of workstations, based on similar past projects, it is determined that on average 1 technician could complete final configuration of 2 workstations per day. Supposed there are 3 equally qualified technicians performing the task and there are 24 workstations to be configured, the total days for this task to be completed is quantitatively determined from bottom-up as follows:

1 Technician = 2 Workstations

3 Technicians = 2 x 3 = 6 Workstations per Day

6 Workstations = 1 Day

24 Workstations = 1/6 x 24 = 4 Days

The configuration cost of a workstation unit is $100 and workmanship cost is $80 per technician per day.

Hence, the total costs is ($100 x 24) + ($80 x 3 x 4) = $2400 + $960 = $3360

-Reference- PMBOKĀ® Guide (2017: 200-01): A Guide to the Project Management Body of Knowledge, 6th Edition, Pennsylvania: PMI, Inc.

last edited by: Pang DX on Dec 6, 2018 7:42 AM login/register to edit this page

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