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The selection as to which type is most appropriate is

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The selection as to which type is most appropriate is dependent on the maturity of available cost data. Thefollowing pages explain each cost estimating type.DCLL015 - Product Support BCABuilding the Product Support BCAPage 20 of 43ProgressDLink:Long DescriptionFour different graphics each labelled with one of the four cost estimating types
Parametric EstimatingIn parametric cost estimating, the cost is basedupon physical attributes or performancecharacteristics and their relationships to highlyaggregated component costs. For example, the totalestimated cost of an item will depend on suchthings as size, weight, and speed.The lack of a significant number of data points canlimit or preclude the use of parametric costestimating. The results of a parametric estimatedepend upon the ability of the analyst to establishvalid relationships between the attributes orelements that make up the alternative and its cost.Therefore, properly choose and describe the CostEstimating Relationship (CER). When documentingresults that have used a CER, present the statisticalcharacteristics of the CER, the source database, andall assumptions surrounding the CER development.CLL015 - Product Support BCABuilding the Product Support BCAPage 21 of 43Progress
Estimating by AnalogyThe analogy approach is based on direct comparisonwith actual data, historical information of similarexisting activities, systems, or components. Themajor disadvantage of this method is that it is ajudgment process, requires considerable experienceand expertise, and assumes that analogous systemsare available.Use this method when the comparability of theanalogous system and the product/process is welldocumented. The documentation should give aconvincing argument that the product/process issimilar enough to the source to make the analogyvalid. A variation to this methodology is to make anadjustment to the source data to account for somevariation in the estimate of the product/process.For example, if commercial vehicle data are used toestimate some aspect of a tactical vehicle, anadjustment could be made to the source data.Document the "adjustment technology" well so thatthere is no doubt about the methodology.DCLL015 - Product Support BCABuilding the Product Support BCAPage 22 of 43ProgressDLink:Long DescriptionCollage graphic depicts the analogous relationship of high speed boats: one a high speed US Navy specialoperations boat and the other a high speed civilian boat
Engineering EstimatingThe engineering or bottom-up approach can bebroadly defined as an examination of separatesegments of work at a low level of detail and asynthesis of the many detailed estimates into atotal.Estimating by the engineering method requires theanalyst to have an extensive knowledge of thesystem characteristics such as the system design,the sustainment processes, and the sustainmentorganization.

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