From the course: Accounting Foundations: Cost Estimating
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Analogous approach
From the course: Accounting Foundations: Cost Estimating
Analogous approach
- You just discovered you're responsible for a new project and naturally, this makes you very nervous. You've never done this before, so, where do you start? This is where applying analogous estimating is appropriate. Analogous estimating uses data from past projects to estimate the cost and time of a current project. In other words, this approach is about comparing one project with another, that's what analogous means, to compare. Analogous estimating is best used when the current project has limited information or has no actual cost data. So this makes is really simple to use, but you can't just go out and pick your favorite project, it doesn't work that way. The projects needs to have been properly documented. You need to access the estimates and to know how they were made. And also they need to be similar to the one you're actually working on. Otherwise, I mean, what are you doing here? Analogous is about comparing, so…
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