Which cost estimating approach uses historical information to guide estimates for similar projects?

Which cost estimating approach uses historical information to guide estimates for similar projects?

• A. Engineering Approach
• B. Analogy Approach
• C. Parametric
• D. Delphi

Answer: (B)

Relying on historical data from past projects to estimate costs for similar upcoming work uses the Analogy Approach. It starts with a comparable completed project and uses its actual cost as a baseline, then adjusts for differences in scope, scale, technology, site conditions, and other factors to fit the current project. This method is especially useful in early planning or when little detailed information is available, because it leverages real-world experience and a concrete reference point rather than building a model from scratch. In practice, you identify a similar project, compare the cost drivers, and apply adjustment factors to account for any variances, risks, or changes in conditions. While intuitive and fast, its accuracy hinges on how truly similar the reference project is and the quality of the adjustments; it may be less reliable if the current project has significant differences or unique risks. Other approaches—the Engineering Approach, which relies on detailed engineering data and quantities; the Parametric method, which uses mathematical relationships across data sets; and the Delphi method, which depends on successive rounds of expert judgment—do not directly base estimates on a past project’s cost in the same way.

Relying on historical data from past projects to estimate costs for similar upcoming work uses the Analogy Approach. It starts with a comparable completed project and uses its actual cost as a baseline, then adjusts for differences in scope, scale, technology, site conditions, and other factors to fit the current project. This method is especially useful in early planning or when little detailed information is available, because it leverages real-world experience and a concrete reference point rather than building a model from scratch. In practice, you identify a similar project, compare the cost drivers, and apply adjustment factors to account for any variances, risks, or changes in conditions. While intuitive and fast, its accuracy hinges on how truly similar the reference project is and the quality of the adjustments; it may be less reliable if the current project has significant differences or unique risks. Other approaches—the Engineering Approach, which relies on detailed engineering data and quantities; the Parametric method, which uses mathematical relationships across data sets; and the Delphi method, which depends on successive rounds of expert judgment—do not directly base estimates on a past project’s cost in the same way.