Parametric estimating is a technique used to make estimates, specifically for project management to estimate costs or estimate activity durations. With parametric estimating, a calculation is made to create an estimate based on data and a formula.
The estimates can use internally gathered historical data, published data, or information purchased from a third party, such as a consulting company. As more projects are completed, the estimates can become more accurate, and additional factors that can affect the estimates can be identified and incorporated.
Related: analogous estimating
For instance, a lawn service may estimate that for yards with grass coverage between 1/3 to 1 acre, it will take 10 minutes of set-up and pack-up time plus 10 minutes for each 1/3 acre. Round up for yards that are not evenly broken into 1/3 acres. So for a yard of 1/2 acre (1/2 acre=1/3+1/6acres), the time would be 30 minutes (10 for set and pack-up; 10 for 1/3, and 10 for 1/6). (This example is invented and not intended for real use.)
Initially, a house painting company may base the estimates for the amount of paint and time on a simple model of internal/external and square footage. With more experience, the company could make more accurate estimates based on whether the house is one or two story, painting is internal, external, or both, how full the rooms are, the kinds of trim, whether there are plants in the way outside, square footage, and other factors.