A blend of the linear regression and unit techniques, you use parametric cost estimating to take a handful of components that may serve as inputs to the cost of a project to come up with a per-unit cost. Typically you' l l utilize units that have some dependency on a cost driver. Parametric cost estimating is used heavily in the construction or manufacturing segments of project management, areas in which it' s important to understand your cost basis in comparison to the expected output of the new building or the number of products that will flow off the assembly line. Dor example, your final product is the result of the assembly of several parts, the per-unit costs of which are driven by the manufacturers of those parts.
A very interesting sub-application of this technique describes the learning curve that assembly line employees will encounter when assembling a new product. Employees might, in the first twenty units to be assembled, take two hours to assemble each one. In subsequent instances—say, the next twenty—the effort goes down to one hour each; and finally, thereafter, the learning curve has been rounded and employees have arrived at a fairly consistent 45-minute assembly time.
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What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.