Definition:
A cost estimation technique that uses historical data from similar past projects to predict costs for a new project, making adjustments based on differences in scope, size, or complexity.
Key Components:
- Project Similarity Assessment: Identifying comparable past projects.
- Adjustments for Differences: Modifying estimates based on varying factors such as scale, location, or technology.
- Expert Judgment: Incorporating professional insights to refine estimates.
- Data Validation: Ensuring historical data is accurate and applicable.
Use Cases/Industries:
- Oil & Gas: Estimating costs for new drilling operations based on previous wells.
- Renewable Energy: Predicting expenses for solar or wind projects using past installations.
- Infrastructure Development: Forecasting highway or bridge costs using prior government projects.
Advantages:
- Quick Estimation: Provides a rough estimate early in project planning.
- Leverages Historical Data: Uses real-world cost benchmarks.
- Minimal Resource Requirements: Does not require in-depth project details.
Challenges:
- Data Accuracy: Relies on quality and completeness of past project records.
- Assumption Risks: May not fully account for unique project differences.
- Limited Detail: Lacks specificity compared to bottom-up estimating.
Related Terms:
Parametric Estimating, Benchmarking, Cost Prediction
Example:
A power plant developer uses analogous estimating to predict costs for a new facility by referencing a similar plant built in the same region three years prior, adjusting for inflation and new regulations.
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Synonyms:
Comparative Estimating, Historical Estimating
