According to the PMBOK® Guide, Analogous Estimating is a technique for estimating the duration or cost of an activity or a project using historical data from a similar activity or project.

The Methodology: It uses the values of parameters—such as scope, cost, budget, and duration—or measures of scale (such as size, weight, and complexity) from a previous, similar project as the basis for estimating the same parameter or measure for a current project.

When to Use It: It is frequently used when there is a limited amount of detailed information about the project (e.g., in the early phases).

Characteristics:

Top-Down Approach: It is generally less costly and time-consuming than other techniques.

Accuracy: It is generally less accurate than bottom-up or parametric estimating.

Reliability: It is most reliable when the previous projects are similar in fact and not just in appearance, and the project team members preparing the estimates have the needed expertise.

Analysis of Other Options:

A. Reserve analysis: This is used to determine the amount of contingency and management reserves needed for the project to account for cost or schedule uncertainty (risk).

B. Three-point estimating: This technique improves accuracy by considering estimation uncertainty and risk. It uses three estimates (Most Likely, Optimistic, and Pessimistic) to define an approximate range for an activity’s cost or duration.

C. Parametric estimating: While this also uses historical data, it uses a statistical relationship between historical data and other variables (e.g., square footage in construction, lines of code in software) to calculate an estimate. It is more quantitative than analogous estimating.