What is parametric estimation?Definition

When to use it
Parametric estimating in PMBOK(r). Guide
Parametric estimating formula
How to do it
Example 1: Parametric estimating examples
Example 2
Example 3

Calculating the total project cost
Limitations of parametric estimation

What is parametric estimation?
Parametric estimating can be used to estimate time, resources and costs.
It uses parameters (characteristics), to create estimates based upon what you already know. This makes it useful for project managers because it’s reliable. Because they are data-based, thought-through, and quantitative, you get accurate data.
It’s also one of the many project estimation techniques covered in the Project Management Professional (PMP(r)) exam. So if you are studying, it is important to understand the concepts and how they can be applied so you can confidently take your test.
Definition
An estimation approach that uses historical data and other variables to calculate estimates.
Dictionary of Project Management Terms, 3rd edition, J. LeRoy WardWhen to Use It
Three situations call for the use of parametric models:
If you have data that can be used for modeling (get it from historical information from other projects)
The model is scaleable, meaning that the parameters can be adjusted to suit any number of units of work.
It is easy to determine the parameters: the work can be easily quantified into recognizable units, e.g. hours, dollars, meters etc.
These conditions must be met in order to use this technique.
It’s not something I use often. Most of the time, I am estimating knowledge work or tasks in which analogous estimating (where one looks at past projects to see how long similar tasks took) are more reliable.
If your new project has tasks that have a statistical relationship, such as square footage prepared in construction, time taken to complete the task, or number of lines of code written by an experienced developer in an hour, then you can use this information to get a better estimate.
Parametric estimating in PMBOK(r). Guide
This technique is mentioned in the PMBOK(r), Guide, as a method to estimate activity durations and costs.
It is described in the PMBOK(r), Guide as a technique that can be used for a complete project or to estimate the costs of parts of a project. This allows it to be combined with other techniques to calculate either the total project cost or duration.
Parametric estimating formula
Simply put, multiply the amount of work required by the labor hours per unit.
It is easier to see how it works in practice by using a few examples. So, let’s see what we have below.
How to do it
First, define the parameters. Units of work are required.
Next, take a look at past projects. It’s always useful to look back and learn from what happened.
Calculate how many units of work you will need.
Multiply the work required by cost/time/effort per unit. Voila!
There is a learning curve to any new project management technique.
Keep track of what you did and save that information for your next project. Even if the task is complex, it will be useful to look back at your past experiences.
Examples of parametric estimating
Parametric estimating is a way to get high-quality estimates when you have the task-level data. It uses data that you already know to be true. These are just a few examples of how it works.
Example 1
Here’s an example.
It takes one person an hour to plant 20 potatoes. Two people will need two hours to plant 80 potatoes.