Parametric Estimating

Parametric Estimating is a technique that calculates estimates by leveraging statistical relationships between variables. In essence, it applies a mathematical model to predict costs, durations, or resource requirements. The complexity of the model can vary depending on the nature and scope of the project or activity being estimated.

Example:
A simple parametric model can be built in a spreadsheet using variables such as:

• Number of senior programmers
• Number of junior programmers
• Pay rate for senior programmers
• Pay rate for junior programmers
• Project duration (in months)
• Work hours per month (e.g., 160 or 173.33)

Prerequisites:

• ROM (Rough Order of Magnitude) parametric estimating spreadsheet

Steps to Perform Parametric Estimating:

1. Create the estimating spreadsheet – Set up the framework with relevant variables and formulas.
2. Populate the spreadsheet – Input data and assumptions based on the project requirements.
3. Refine the estimate – Adjust assumptions and update the spreadsheet iteratively to improve accuracy.
4. Document the estimates – Record the final estimates along with the assumptions and rationale for transparency.