What is Analogous Estimating?
Analogous estimating is a project estimation technique that uses historical data from previous, similar projects to estimate the cost, duration, or effort required for the current project. This technique is based on the idea that similar projects will have similar costs, timelines, and resource needs, making it possible to use data from past projects to predict outcomes for the current one.
🔹 Key Objective: Use historical data from similar projects to make educated predictions about the cost, duration, or effort of a new project.
Importance of Analogous Estimating
✔ Speed: Provides quick estimates because it relies on historical data, which can be obtained quickly without the need for detailed analysis or complex calculations.
✔ Cost-Effective: In the early stages of a project, when detailed information may not be available, analogous estimates offer a cost-effective way to get a sense of project feasibility.
✔ Real-World Basis: Estimates are grounded in real-world experiences and actual project data.
✔ Usefulness for Similar Projects: Particularly effective for projects that are similar to past ones in terms of scope, size, and complexity.
How Analogous Estimating Works
The process of analogous estimating involves several key steps:
Step 1: Identify Similar Past Projects
Identify one or more previous projects that are similar in terms of:
- Size: Similar scope or deliverables.
- Complexity: Similar technological or process requirements.
- Resources: Similar resource needs (e.g., personnel, equipment).
- Timeline: Similar project duration or phases.
Step 2: Gather Historical Data
Collect relevant data from these past projects. This data typically includes:
- Cost: Total project cost, cost per unit (e.g., per feature, per square foot).
- Duration: Total time taken or time per task.
- Resources: Labor, materials, and equipment usage.
Step 3: Adjust for Differences
While analogous estimating uses historical data from past projects, adjustments are often necessary to account for differences between the current project and the previous ones. These differences might include:
- Inflation (for cost estimates).
- Technology differences (new tools or systems).
- Project size (larger or smaller than previous projects).
- Team expertise (a more experienced team may complete the project faster).
Adjust the historical data accordingly.
Step 4: Apply the Estimate
Based on the historical data and adjustments, generate an estimate for the current project. The estimate can be adjusted by proportion or based on specific features.
Step 5: Validate the Estimate
Once the estimate is made, it should be validated with stakeholders or experts to ensure that it aligns with project expectations. It may be compared with other estimation techniques (e.g., parametric estimating, expert judgment) to refine the prediction.
Advantages of Analogous Estimating
✔ Quick and Easy: Produces estimates relatively quickly compared to more complex techniques.
✔ Cost-Effective: Requires fewer resources (like time and analysis) to generate estimates.
✔ Works Well for Similar Projects: Best used for projects that closely resemble past projects.
✔ Less Detailed Data Needed: Doesn’t require detailed planning, as it relies on existing data from similar projects.
✔ Provides Early Estimates: Helpful in the early stages of the project when detailed data may not be available yet.
Disadvantages of Analogous Estimating
❌ Accuracy Depends on Similarity: The accuracy of the estimate relies heavily on the similarity between the current project and the historical projects used. Significant differences can lead to inaccurate estimates.
❌ Potential for Bias: The judgment of the estimator may be influenced by past experiences, leading to over-optimistic or over-pessimistic estimates.
❌ Lack of Granularity: Analogous estimating typically provides rough estimates and may not be detailed enough for complex or unique projects.
❌ Limited by Historical Data: If past projects are not well documented or data is incomplete, the estimate’s reliability can be compromised.
When to Use Analogous Estimating
- Early Project Phases: When detailed data is not yet available, but a rough estimate is needed.
- Similar Projects: When the current project is very similar to a previous one in terms of scope, complexity, and size.
- Low Complexity Projects: For smaller or low-risk projects where a rough estimate is sufficient.
- Time-Boxed or Budget-Constrained Projects: When an approximate estimate is needed to set expectations and manage constraints.
Example of Analogous Estimating
Let’s assume you are estimating the cost and duration for a new software development project. You have historical data from a similar project:
Historical Data (Previous Project)
- Previous Project (Project A):
- Scope: Development of a small e-commerce website.
- Cost: $50,000
- Duration: 6 months
Current Project
- Current Project (Project B):
- Scope: Development of a larger e-commerce website with additional features (e.g., advanced search, multi-currency support).
Step 1: Identify Similarities and Differences
- The current project has additional features and a larger scope, so adjustments are needed.
- Assumption: The previous project took 6 months and $50,000, and the new project is approximately 50% larger in scope.
Step 2: Adjust for Differences
- Since the current project is 50% larger in scope, it may take 50% more time and cost.
- Adjusted Duration Estimate: 6 months + 50% = 9 months
- Adjusted Cost Estimate: $50,000 + 50% = $75,000
Step 3: Apply and Validate
The analogous estimate for the current project is approximately $75,000 and 9 months.
This estimate can now be validated with expert judgment or compared against other estimation methods (e.g., parametric estimating) to check for consistency.
Common Tools for Analogous Estimating
- Microsoft Project: Can help generate analogical estimates using past project templates.
- Excel/Google Sheets: Using historical data, you can create formulas to estimate cost, duration, and other project parameters.
- JIRA/Trello: If you have historical data from previous sprints or projects, you can use these tools to track the effort and time for future estimation.
Conclusion
Analogous estimating is a practical and efficient method for estimating project parameters based on historical data. It is best used when projects are similar in scope, size, and complexity, allowing you to leverage previous project experiences. While it is a fast and cost-effective method, its accuracy is heavily reliant on the quality and relevance of the historical data.
✅ Key Takeaways:
✔ Quick and efficient for early-stage estimation.
✔ Relies on past project data for making predictions.
✔ Works best for similar projects with comparable scope and complexity.
✔ May need adjustments for differences in scope, resources, and technology.
