According to the PMBOK® Guide, Analogous Estimating is a technique for estimating the duration or cost of an activity or a project using historical data from a similar activity or project.
Limited Information: It is the most appropriate technique when there is a limited amount of detailed information about the project (e.g., in the early phases of a project). It uses the values of parameters—such as scope, cost, budget, and duration—or measures of scale from a previous, similar project as the basis for estimating the same parameter or measure for a current project.
Accuracy vs. Speed: While it is generally less costly and time-consuming than other techniques, it is also generally less accurate. It is most reliable when the previous projects are similar in fact and not just in appearance, and the project team members preparing the estimates have the needed expertise.
Analysis of other options:
Parametric Estimating (Option B): This uses a statistical relationship between historical data and other variables (e.g., square footage in construction) to calculate an estimate. It requires a higher level of data and a reliable mathematical model.
Bottom-up Estimating (Option C): This is a method of estimating project duration or cost by aggregating the estimates of the lower-level components of the WBS. It is the most accurate but requires a high level of detail, which is not available when information is limited.
Three-point Estimating (Option D): This uses three estimates (most likely, optimistic, and pessimistic) to define an approximate range for an activity ' s cost or duration. While it helps account for uncertainty, it still requires enough detail to form those three distinct perspectives.
Per PMI standards, Analogous Estimating is often used to provide a " Rough Order of Magnitude " (ROM) estimate during the initiating or early planning stages of a project life cycle.
