Analogous Estimation Techniques in Construction Project: Requirements, Uses & Advantages

Analogous estimating, also known as top-down estimating, is a technique that leverages historical data from previous projects to estimate the costs and timelines for similar new projects. This method is particularly useful for project managers when they have limited information about the current project. 

By using analogous estimation, project managers can make educated guesses based on the outcomes of previous projects with similar characteristics.

Requirements of Analogous Estimation Technique

Analogous estimation relies on several key parameters derived from historical data to make accurate predictions about future projects. The essential requirements for employing analogous estimation in the construction industry include:

1. Historical Data from Previous Projects: Data from past construction projects is crucial for analogous estimation. This data includes the project’s scope, cost, and duration, as well as other scale parameters like size, weight, and complexity.
2. Similarity to Current Projects: The historical projects used for comparison should be similar to the current project. This similarity ensures that the estimates are relevant and applicable.
3. Relevant Modules and Activities: For entirely new projects, analogous estimation requires collecting data on similar modules and activities from past projects. This data helps in making accurate estimates for the new project’s activities.
4. Experienced Judgment: The participation of experienced project managers and estimation teams is vital. Their expertise and judgment play a significant role in the accuracy of the estimates.

When to Use Analogous Estimates?

Analogous estimates are suitable for various scenarios within construction projects, including:

1. Initial Project Valuation: Analogous estimation is ideal for putting an initial value on a project and its components. It is often used to create bids for projects, which can be refined as the project progresses.
2. Lack of Exact Comparison Data: When there is no exact data available for comparison with the current project, analogous estimation provides a viable alternative by using similar historical data.
3. Rough Estimates: This technique is useful when only rough estimates are required. It provides a broad understanding of the project’s potential costs and timelines.
4. Expert Judgment: Analogous estimation allows project managers to obtain expert judgments by comparing their experience and knowledge with data from past projects.

Limitations of Analogous Estimation

While analogous estimation is beneficial, it is not without its limitations. It is not the most accurate project estimation technique and is more appropriate for the initial planning stages rather than the execution stages. The technique relies heavily on the accuracy and relevance of historical data, which can sometimes lead to inaccuracies if the past projects are not sufficiently similar to the current one.

Detailed Look at the Requirements

Let’s delve deeper into the basic requirements for using the analogous estimation technique effectively:

1. Historical Data from Previous and Ongoing Projects: Accurate and comprehensive data from previous and ongoing projects is the backbone of analogous estimation. This data should include detailed information about the project’s scope, cost, duration, size, weight, complexity, and any other relevant parameters.
2. Similarity to the Current Project: The projects being compared should have significant similarities to the current project. These similarities ensure that the estimates are applicable and can provide a realistic projection of the costs and timelines.
3. Collection of Similar Modules and Activities Data: For new projects, it is essential to collect data on similar modules and activities from past projects. This data helps in estimating the effort and resources required for similar activities in the new project.
4. Experienced Judgment from Project Managers and Estimation Team: The involvement of experienced project managers and estimation teams is crucial. Their expertise and judgment significantly influence the accuracy of the estimates. They can provide valuable insights and adjustments based on their experience with similar projects.

Advantages and Drawbacks in Depth

Advantages:

1. Quick and Simple: Analogous estimation allows for rapid estimates, which is particularly useful in the early stages of project planning when time is of the essence.
2. Cost Savings: This technique reduces the need for extensive data collection and processing, leading to significant cost savings.
3. Utilization of Limited Data: When detailed current project data is not available, analogous estimation provides a practical solution by using historical data.
4. Enhanced Understanding of Project Effort and Duration: Project managers can gain a better understanding of the effort and duration required for various activities by analyzing past projects.

Drawbacks:

1. Accuracy Limitations: Analogous estimation is not as accurate as other estimation techniques, especially for complex projects. It provides rough estimates that may need significant adjustments as more information becomes available.
2. Dependency on Historical Data: The technique relies heavily on the availability and accuracy of historical data. If the past projects are not sufficiently similar to the current one, the estimates may be inaccurate.
3. Subjectivity: The involvement of experienced judgment introduces a level of subjectivity that can affect the accuracy of the estimates.

Conclusion

Analogous estimation is a valuable technique for project managers in the construction industry, particularly in the early stages of project planning. By leveraging historical data and the expertise of experienced project managers, it provides quick and cost-effective estimates for new projects. However, it is important to recognize its limitations and use it in conjunction with other estimation methods for more accurate and reliable project planning.

In summary, analogous estimation offers a practical approach to project estimation when detailed data is limited. Its simplicity, cost-effectiveness, and ability to provide rough estimates make it an essential tool for project managers. However, it should be used with caution, and project managers should be aware of its limitations and the potential for inaccuracies.