What Is Analogous Estimating?
Analogous estimating is a project management technique used to estimate the cost, duration, or resources required for a new project or task by comparing it to similar, previously completed projects.85 This top-down estimation method falls under the broader categories of Project Management and Financial Forecasting because it directly influences budgeting and resource allocation for future endeavors.84,83
The core principle of analogous estimating relies on the idea that if a past project had certain characteristics and outcomes, a current project with similar characteristics will likely have comparable outcomes.82 It leverages existing historical data and expert judgment to provide a quick, high-level estimate, particularly useful in the early stages of project planning when detailed information is limited.81,80
History and Origin
The practice of estimation in large-scale endeavors has existed for centuries, evolving alongside the complexity of human undertakings. From ancient construction projects like the pyramids to modern engineering feats, leaders and builders have always needed to forecast the resources, time, and costs involved. The formalization of estimation techniques, including rudimentary forms of analogous thinking, grew as project management matured as a discipline. The Project Management Institute (PMI), founded in 1969, played a significant role in standardizing and promoting various project management practices, including different estimation methods, as the field became more professionalized.79, Early forms of analogous reasoning would have been informally applied by seasoned professionals relying on their personal experience with similar past ventures to gauge future needs.78
Key Takeaways
- Analogous estimating relies on historical data from similar past projects to estimate current project parameters like cost, duration, or resources.77,76
- It is a quick and efficient "top-down" method, particularly useful in the early stages of a project when detailed information is scarce.75,74
- The accuracy of an analogous estimate heavily depends on the similarity between the current project and the historical reference, as well as the quality of the available data.73
- This method leverages expert judgment to adjust for differences between projects and refine the estimate.72
- Analogous estimating is often used to provide a Rough Order of Magnitude (ROM) estimate, rather than precise figures for final budgeting or detailed project control.71,70
Interpreting Analogous Estimating
Analogous estimating provides a high-level, "ballpark" figure rather than a precise calculation.69 When interpreting an analogous estimate, it is crucial to understand that its accuracy is directly proportional to the degree of similarity between the current project and the historical projects used for comparison. The more alike the projects are in terms of scope, complexity, technology, and team experience, the more reliable the estimate.68
This method is best understood as a preliminary guide for decision-making and setting initial expectations, rather than a definitive forecast. It helps stakeholders quickly gauge the potential magnitude of a project's cost or duration without requiring extensive detailed planning.67,66 Adjustments based on known differences between projects are critical for improving the estimate's relevance.65,64
Hypothetical Example
Imagine a small construction company that specializes in building single-family homes. They are bidding on a new project: constructing a 2,000-square-foot, three-bedroom house with a standard layout.
To perform analogous estimating, the project manager looks back at their company's records. They find a similar 2,100-square-foot, three-bedroom house completed last year, which took five months to build and cost $300,000. This previously completed house serves as the analogous project.
Based on this historical data, the project manager provides an initial estimate for the new house. They might adjust the cost slightly downward to $290,000 due to the slightly smaller size and anticipate a similar five-month construction timeline. This initial estimate can then be used to create a preliminary budgeting plan and begin resource allocation discussions, even before a detailed architectural plan is finalized.
Practical Applications
Analogous estimating finds practical application in various fields where quick, high-level forecasting is required. In project management, it's frequently used in the initiation phase to provide a rapid estimate for overall project cost or duration.63,62 This allows for preliminary risk assessment and helps in early discussions with stakeholder management about project feasibility.61,60
For instance, a software development firm might use analogous estimating to provide a prospective client with a rough cost estimate for a new mobile application based on the time and resources spent on similar apps developed previously.59,58 Similarly, in construction, an initial bid for a building project might leverage the costs of comparable past projects.57 The Project Management Institute notes that this technique is useful for providing early estimates for activity durations, enabling initial schedule creation.56
Limitations and Criticisms
While efficient, analogous estimating has significant limitations that can impact its precision. A primary drawback is its inherent lack of detail and potential for inaccuracy, especially if the current project differs significantly from the historical data used.55,54 Over-reliance on potentially irrelevant or outdated historical data can lead to misleading estimates.53,52
This method also heavily relies on expert judgment, which can introduce bias or variability.51 Cognitive biases, such as the anchoring bias, can cause estimators to be unduly influenced by the initial historical figure, leading to insufficient adjustments for unique project characteristics or changes in conditions.50,49,48 This can result in unforeseen variance analysis, scope creep, or the need for substantial contingency reserves later in the project lifecycle.47,46,45 Moreover, if an organization lacks robust historical data or is undertaking a truly unique project, analogous estimating may be impractical or highly unreliable.44,43
Analogous Estimating vs. Parametric Estimating
Analogous estimating and Parametric estimating are both top-down estimation techniques that utilize historical data, but they differ significantly in their approach and precision.42,41
| Feature | Analogous Estimating | Parametric Estimating |
|---|---|---|
| Basis | Compares the current project to similar past projects as a whole. Relies on overall similarities.40,39 | Uses statistical relationships between historical data and project parameters (e.g., cost per square foot, time per line of code).38,37 |
| Accuracy | Generally less precise; provides a Rough Order of Magnitude (ROM).36,35 | More accurate due to mathematical modeling and scaling.34,33 |
| Input Data | Requires general historical data from comparable past projects.32,31 | Requires historical data with measurable units and identified variables.30,29 |
| Complexity | Simpler and quicker to perform.28,27 | More complex; involves calculations and statistical analysis.26,25 |
| Application | Best in early project phases when information is scarce.24,23 | Suitable when specific unit rates and defined parameters are available.22,21 |
| Top-Down/Bottom-Up | Often considered a top-down approach.20,19 | Can be top-down, but involves more granular unit-based calculations.18,17 |
While analogous estimating offers speed and simplicity by comparing projects at a high level, parametric estimating aims for greater accuracy by applying mathematical models based on quantifiable relationships.16,15
FAQs
When is analogous estimating most effective?
Analogous estimating is most effective in the early stages of a project when detailed information is limited, and a quick, high-level estimate is needed.14,13 It's particularly useful when an organization has a history of successfully completing similar projects.12
What kind of data is needed for analogous estimating?
The primary data needed is historical data from past projects that are similar in scope, complexity, and other key attributes to the current project. This typically includes actual costs, durations, and resource consumption of those completed projects.11,10
How accurate is analogous estimating?
Analogous estimating provides a rough estimate, often considered a "Rough Order of Magnitude" (ROM), with an accuracy range that can be as wide as -25% to +75%.9 Its accuracy depends heavily on the similarity of the projects and the reliability of the historical data and expert judgment applied.8,7
Can analogous estimating be used for time management?
Yes, analogous estimating can be used to estimate activity durations and overall project timelines.6,5 By looking at how long similar tasks or projects took in the past, an estimate for current time management can be derived.4
Is analogous estimating suitable for unique projects?
Analogous estimating is generally not suitable for truly unique projects where no comparable historical data exists.3,2 Its effectiveness relies on the ability to draw meaningful comparisons from past experiences. For unique projects, other estimation techniques that build from detailed analysis may be more appropriate.1