TOPIC: Free CAPM® Exam Sample Question

Which of the following estimating techniques is often used to estimate a value when there is a limited amount of detailed information about the project?

A. Analogous estimating
B. Parametric estimating
C. Three-point estimating
D. Bottom-up estimating

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HINT: Distinguish between management reserves and contingency reserves

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Answer and Explanation:
The correct answer is A

Although all of these estimating methods are based on historical information, analogous estimating is the simplest method, which uses cost, scope, and budget numbers from previous projects and makes some adjustment for known differences. Although this method is generally less accurate, it is often used for projects with a limited amount of detailed information. Other techniques such as parametric and three-point estimating often require more detailed information to conduct an evaluation.

Details for each option:

A. Analogous estimating
Correct. Analogous estimating is an estimating method that mainly uses the historical information from previous similar projects such as cost, scope, schedule, etc. as the basis for estimating for the current project. It is often recommended to be used when there is limited information about the project.

B. Parametric estimating
Incorrect. The parametric estimating method often combines historical data with some variables that require more detailed information about the current project to provide better estimating on its parameters, compared to the analogous estimating method.

C. Three-point estimating
Incorrect. The three-point estimating requires detailed information about the project to estimate project parameters for each activity in the best, worst, and most likely case.

D. Bottom-up estimating
Incorrect. Bottom-up estimating is a method of estimating a component of work. Thus, in order to apply this method, the project needs to be decomposed in detail to the work package or activity level.

Reference: Guide to the Project Management Body of Knowledge, (PMBOK^® Guide) – Sixth Edition, Project Management Institute Inc., 2017, Page(s) 200