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How to use analogous estimating for better budgeting

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Businesses are always looking for new and accurate ways to estimate the cost and duration of future projects. When there’s limited project information available, duration and cost estimates have to be based on data from a similar past project. One type of estimation that allows managers to gauge costs is analogous estimation. Also known as top-down estimation, this technique maps the trajectory of a project using information from a previous project.

As Albert Einstein said, “the only source of knowledge is experience.” While we’re not trying to develop the theory of relativity here, Einstein’s philosophy can be applied in the project management drawing room. This article covers everything you need to know about analogous estimating, its advantages and drawbacks, and how using can help.

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What is analogous estimating?

Analogous estimating is a technique that uses information from a similar past project in order to estimate the cost and duration of a planned project.

This approach is often used when there is limited data available for a project, making it difficult to generate accurate estimates. By comparing current projects to previous projects, you can estimate outcomes and plan accordingly. Let’s explore how analogous estimating works in real life.

“Analogous estimating” is a part of our Project Management Glossary — check out the full list of terms and definitions!

How does analogous estimating work?

The key to successful analogous estimation is choosing a project that is as similar as possible. Once you pick a project, you can identify the items that are relevant to both projects. You can then use the values from the comparable project to generate an estimate for the new project. While analogous estimation can be effective, it’s important to remember that this method is only as accurate as the similarity between the two projects. If there are significant differences between the projects, estimates may not be accurate.

The steps required for analogous estimating are as follows:

  1. Make a list of similar past projects.
  2. Collect data for relevant variables, including cost, duration, activities, and scope.
  3. Create a short list based on similarities.
  4. Decide which types of estimates are needed based on stakeholder requirements and estimator strength.
  5. Calculate estimate values for the current project.

Analogous estimating in project development

Analogous estimates can be useful for estimating any type of project. They are used when managers need to create estimates reliable enough to support the start of a project but have limited data available. While you can use analogous estimates to conduct overall project cost estimates, you can also use them to estimate costs on individual tasks. As such, analogous estimating is a very flexible and versatile technique for estimating.

Consider using this technique if the following circumstances apply to your project:

Project outlines come in all shapes and sizes, some with clearer background data than others. Oftentimes, rough estimates are enough to get started on a project strategy, and you can refine numbers along the way. So, what are the advantages and potential drawbacks of using analogous estimating?

How analogous estimating can help or hurt a project

As with any technique, it’s important to understand the potential benefits and limitations before implementation. This way, you can have realistic expectations about results and avoid operational mishaps down the road.

Advantages of analogous estimation

Drawbacks of analogous estimation

Example of analogous estimating

A manager wants to estimate the cost and duration of a marketing campaign to parallel the launch of a new product. Being in the initial phases, they don’t have exact price quotes or timelines, nor do they have a sense of the projected impact of activities. The goal of the campaign is to generate 15,000 page views of a new product page. To create a rough estimate, they compile a list of 10 similar past projects and review them all, eventually selecting the one most similar to the project at hand. They then use the costs and duration values from the chosen project to calculate estimates for the current project.

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Step-by-step analogous estimating with is a versatile project management tool that provides users with a centralized place to store all project-related information. It offers a wide range of features that allow you to categorize projects based on priority, similarity, or any other criteria. Our Work Estimate Templates help streamline the initial stages of project planning. Let’s look at how you can use to conduct an analogous estimation for your next project.

1. Identify the current project domain and technology

Who is going to be working on the project? For example, is it a product development or marketing initiative? Once you’ve clarified the project domain and you have an idea of the technology required to complete it, you can start looking for a similar past project on which to base your estimate.

2. Find a similar project

Begin by creating a list of 15 to 20 similar past projects based on variables like project domain, project context, or team members. Then, narrow your list down to one or two comparable projects. For this step,’s basic projects board can be helpful, as they enable you to create a list of past projects based on similar variables.

3. Compare current and comparable projects

Once you’ve narrowed your list down to one or two projects, compare them based on the variables that are the most similar. The stronger the similarity, the more accurate your final estimate will be. Project boards can give you information about how long a project took, how many people worked on it, and how much it cost. All of this data can be used to create an analogous estimate.

4. Estimate duration and cost estimates for the current project

Oftentimes, the two variables that project managers are most interested in are cost and duration. At this stage, you should create a rough estimate based on the activities required and stakeholder requirements. You can use a Estimate Template to visualize your budget.

5. Look for similar modules and activities in past projects

You can look at specific modules of similarity between your past projects and use them to calculate a final estimate. If it’s a marketing project, look at which specific marketing activities are common to both projects. You can create cost and duration estimates for individual tasks.

6. Use the data to create final cost and duration estimates

Your final estimate can be a single value, a range of values, or a three-point estimate consisting of the optimistic estimate, the pessimistic estimate, and the most likely estimate. Once you have your estimates, you can use a Work Breakdown Structure (WBS) to start visualizing how you’ll execute your project. You can prioritize tasks and assign team members to them. You can also indicate deadlines so that your project stays on track.

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Frequently asked questions

What is the difference between analogous and parametric estimation?

Analogous estimation is a method of estimation that relies on the similarity between projects. The previous past project is known as the analog, and it serves as a basis for estimation on the new project. By contrast, parametric estimation calculates the expected cost based on known variables.

When is analogous estimation used?

Analogous estimation is most often used when there is limited information about the parameters of a current project. By comparing it to a similar past project, managers can come up with an approximation of how much it will cost and how long it should take.

Is analogous estimating accurate?

The accuracy of an analogous estimation depends on how similar the current project is to the comparison project. The more similar the projects, the more accurate the estimate will be.

Learning from experience with

Something every project manager has to contend with is not having the parameters for a project prior to starting, so sometimes you need to get creative when coming up with estimates. Analogous estimation is the perfect approach when you have limited information about project variables. By using data from past projects, you can create rough estimates and start strategizing. While your estimates might change along the way, you do have a framework at the project outset so that you can get the ball rolling.

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