From the course: Accounting Foundations: Cost Estimating
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Parametric approach
From the course: Accounting Foundations: Cost Estimating
Parametric approach
- Let's get into more detail with the parametric approach. This approach is one of the most accurate techniques for determining a project duration and cost, analysts like it, because it's fairly easy to use and to implement. You may notice parametric implies the word parameter and parameters are simply specifications or criteria for each item you're costing. Parameters will include published information about the hours and costs of the work or item to purchase. It may not be exactly the parameter you require, but chances are they closely compare it to what you need to cost your effort. Allow me to share an example. Let's say an analyst wants to estimate the cost of building a six-story office tower. The analysts would consult an estimating publication for buildings and look up the cost of constructing a six-story building. These are books or even databases of records on these costs. Companies keep track of these things,…
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