According to the PMBOK® Guide, specifically within the Estimate Activity Durations and Estimate Costs processes, Parametric Estimating is an estimating technique in which an algorithm is used to calculate cost or duration based on historical data and project parameters.
Accuracy Levels: The accuracy of a parametric estimate is highly dependent on the sophistication of the model and the underlying data. If the historical data is accurate and the model is scalable (e.g., cost per square foot for a building or lines of code for software), it can produce higher levels of accuracy than other top-down methods.
Mechanism: It uses a statistical relationship between historical data and other variables (such as square footage in construction or lines of code in software development) to calculate an estimate for activity parameters, such as cost, budget, and duration.
Comparison:
Analogous Estimating (Choice D): Generally the least accurate as it relies on a " top-down " comparison to a previous similar project.
Three-Point Estimating (Choice B): Improves accuracy by considering uncertainty (Optimistic, Pessimistic, and Most Likely), but is still subjective.
Bottom-up Estimating (Choice A): While often considered the most accurate overall because it aggregates detailed work, the specific question asks which technique ' s accuracy depends on the sophistication and data built into a model, which is the defining characteristic of Parametric Estimating.
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