What does Parametric Estimating rely on?

Parametric estimating is a statistical approach that utilizes historical data to calculate costs based on established relationships between project variables. Specifically, it often involves applying a fixed dollar cost per unit measure, such as dollar per foot. This method allows project managers to create more accurate estimates by referencing quantifiable metrics, enabling them to determine costs for the entire project or specific components based on these metrics.

For instance, if historical data indicates that laying cable costs $2 per foot, and the project requires 1,000 feet of cable, then the estimated cost for that component would be $2,000. This approach can significantly enhance the efficiency and accuracy of cost estimation as it relies on actual data rather than guesswork or subjective assessments.

Other options, while relevant in the context of estimating or budgeting, do not represent the core methodology of parametric estimating. Cost by project phase focuses more on budgeting phases rather than unit costs, time-based estimates deal with the duration of tasks rather than direct costs, and team members' hourly rates are related to labor costs but do not utilize a unit cost measure for wider application like parametric estimating does.