According to the PMBOK® Guide and the Standard for Project Management, the technique described is Analogous Estimating. This method uses the values or parameters from a previous, similar project as the basis for estimating the same parameters for the current project.
As per PMI standards, analogous estimating is frequently used to estimate project duration, cost, or budget when there is a limited amount of detailed information about the project (e.g., in the early phases). Key characteristics include:
Top-Down Approach: It is generally less costly and time-consuming than other techniques but also less accurate.
Expert Judgment: It relies on the historical experience of the project team or experts to adjust for differences between the past and current projects.
Reliability: It is most reliable when the previous projects are truly similar in fact and not just in appearance, and the project team members preparing the estimates have the needed expertise.
The other options are incorrect based on the following PMI definitions:
Bottom-up: This is a method of estimating project duration or cost by aggregating the estimates of the lower-level components of the WBS. While highly accurate, it is the most time-consuming method.
Parametric: This uses a statistical relationship between historical data and other variables (e.g., square footage in construction or lines of code in software development) to calculate an estimate for activity parameters. It is more quantitative than analogous estimating.
Three-point: This technique enhances accuracy by considering estimation uncertainty and risk. It uses three estimates (Most Likely, Optimistic, and Pessimistic) to define an approximate range for an activity ' s cost or duration (e.g., PERT).
As per the PMI Lexicon of Project Management Terms, Analogous Estimating is a form of gross value estimating and is often adjusted for known differences in project complexity or scale.
