What is parametric estimating?

Parametric estimating is a technique that involves using historical data and algorithms to forecast costs. This method is grounded in the analysis of past project performance data, allowing for the development of mathematical relationships between variables and costs. By establishing a statistical model based on historical data, estimators can predict costs for future projects by applying these established relationships to new projects with similar characteristics.

This approach is particularly beneficial because it can provide more consistent and objective estimates, as it relies on quantifiable data rather than subjective assessments. For instance, if historical data indicates that the cost per square foot for building a certain type of structure is a specific amount, this can be used to estimate costs for new, similar projects by applying that rate to the planned square footage. This method increases the reliability of the estimates and can help in creating budgets more accurately.

Other options present different estimating methods that do not directly use historical data and quantitative relationships in the same manner as parametric estimating.