Finance and Sourcing · tool 2 of 7
Cost Estimating Techniques
Cost Estimating Techniques: picks the right estimating method for what you know.
Best for: Budget preparation · Time: Hours to days
Domain: Finance · Focus area: Planning
How it works
Analogous estimates reuse a similar project’s cost; fast but rough. Parametric ones multiply a unit rate by a quantity. Bottom-up ones add up detailed work packages; slow but accurate. Three-point estimates capture uncertainty.
- Early on, give ranges, not single numbers.
- Record assumptions behind each estimate.
- Refine as you learn more.
How to apply it
- Pick the method that fits what you know.
- Ask those doing the work.
- Add a range and confidence level.
- Compare two methods for big items.
Parametric: 400 m² at €90 per m² gives €36k. Bottom-up later refines this to €41k.
Never give a single number early. It becomes the promise, whatever you say next.
Quick check
Which method is usually most accurate, once detail exists?
Sources
- PMBOK® Guide, 8th edition, and The Standard for Project Management (PMI, 2025)
Last reviewed 2026-11-02 against the PMBOK® Guide, 8th edition · Practitioner review pending · How this guide is made