what is the best method of estimating data
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The 4 best project estimation techniques
There exists a wide range of different estimating techniques available to the cost estimator. Which are the 4 best you can use? The technique you will use will determine the reliability of the figure that comes out. However, as we will see, not all techniques are possible in each phase of the project.
Factor estimating
The first and most high-level technique available is factor estimating. It derives its name from applying derivative factors for the preparation of the investment estimate of a project. You can use this when the project is not well defined yet: the scope is incomplete and there are possibly still a number of alternatives that need to be worked out in more detail. Since many plans won’t go through anyway, it would be a waste to spend much time on preparing detailed estimates. Factor estimates provide you with that ‘quick and dirty’ number you require to base your decisions on. Common techniques include the Six-tenth rule and the Hand Factor method.
Parametric estimating
Often, companies possess a lot of historical project information that sits unused. Among this might be a collection of previous quotes, contract values and prices. A cost engineer can put this to use by developing parametric estimation techniques. Try to look for relationships between the specifications of previously procured materials or labor. For example, by studying how the size and material type of pumps relates to cost, you might be able to find cost estimate relationships (CERs). To do this correctly, you index all costs to one price level and make the scope comparable. This enables you to setup parametric estimation models for future projects, adding intelligence to otherwise unused procurement data. The graph below shows an example of a CER between pump capacity and its price:
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