Parametric cost estimating technique is defined as?

Parametric cost estimating technique is defined as?

• A. A technique that uses detailed engineering data to estimate costs.
• B. A technique used for quick estimates based on statistical relationships between variables.
• C. A technique that uses historical data from similar projects to estimate costs.
• D. The real costs incurred for a project.

Answer: (B)

Parametric cost estimating builds a mathematical relationship between cost and one or more project characteristics, then uses that relationship to estimate the current project’s cost. It comes from analyzing historical data and deriving a formula (for example, cost per unit of size or effort as a function of a key driver). Because you’re applying a ready-made model to the current project, you can get a quick estimate without detailing every component. This approach works best when the chosen driver correlates well with cost and you have relevant, quality data to base the model on. It differs from detailed engineering estimates that itemize every element, and from naive analogies that just copy from similar projects without a formal model. It also isn’t actual costs, which reflect what was spent, not what is expected to be spent.

Parametric cost estimating builds a mathematical relationship between cost and one or more project characteristics, then uses that relationship to estimate the current project’s cost. It comes from analyzing historical data and deriving a formula (for example, cost per unit of size or effort as a function of a key driver). Because you’re applying a ready-made model to the current project, you can get a quick estimate without detailing every component. This approach works best when the chosen driver correlates well with cost and you have relevant, quality data to base the model on. It differs from detailed engineering estimates that itemize every element, and from naive analogies that just copy from similar projects without a formal model. It also isn’t actual costs, which reflect what was spent, not what is expected to be spent.