Which estimation method is derived from statistical correlation of historical data to predict costs for a project?

Which estimation method is derived from statistical correlation of historical data to predict costs for a project?

• A. Analogous Estimate
• B. Parametric Cost Estimate
• C. Single Point Estimate
• D. Top-Down Approach

Answer: (B)

The method being tested uses a statistical relationship learned from historical data to forecast costs for the current project. It builds a cost estimating relationship (CER) that links a cost driver—like size, area, or capacity—to cost, using past project data and often employing regression or other correlation techniques. Once this relationship is established, you plug in the current project’s driver values to predict the cost. This approach is more scalable and objective than simply matching to a single past project, because it leverages the quantitative link between size or other drivers and cost. Compared to analogous estimation, which relies on finding a similar project and adjusting, parametric estimation uses a formal statistical model to predict costs across different project scales. It’s not the same as a single point estimate, which is just one figure without the explicit relationship to historical data. And it differs from the top-down approach, which starts with an overall project cost that may be derived from various high-level inputs rather than a demonstrated statistical correlation.

The method being tested uses a statistical relationship learned from historical data to forecast costs for the current project. It builds a cost estimating relationship (CER) that links a cost driver—like size, area, or capacity—to cost, using past project data and often employing regression or other correlation techniques. Once this relationship is established, you plug in the current project’s driver values to predict the cost. This approach is more scalable and objective than simply matching to a single past project, because it leverages the quantitative link between size or other drivers and cost.

Compared to analogous estimation, which relies on finding a similar project and adjusting, parametric estimation uses a formal statistical model to predict costs across different project scales. It’s not the same as a single point estimate, which is just one figure without the explicit relationship to historical data. And it differs from the top-down approach, which starts with an overall project cost that may be derived from various high-level inputs rather than a demonstrated statistical correlation.