compare and contrast parametric and reserve analys

compare and contrast parametric and reserve analysis as cost estimation techniques. Please provide an example of each.

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TCO B: Parametric Estimation

Parametric estimation is a cost estimation technique that uses statistical relationships between historical data and project variables to estimate costs. It involves developing cost models based on the relationship between key project parameters and cost elements.

Example: Suppose you are estimating the cost of building a new residential house. Based on historical data, you determine that the average cost per square foot for similar houses in the area is $200. By multiplying the total square footage of the house by the cost per square foot, you can estimate the overall cost of the project.

TCO B: Reserve Analysis

Reserve analysis is a cost estimation technique that involves setting aside contingency reserves to account for uncertainties and risks in the project. It allows for additional funds to be allocated as a buffer to address unforeseen events or changes during project execution.

Example: Let`s consider a software development project. During the estimation process, the project team identifies potential risks and uncertainties, such as technical challenges, scope changes, or resource constraints. They estimate the likelihood and potential impact of these risks and allocate a certain percentage of the overall project budget as a contingency reserve to address any unexpected costs that may arise due to these risks.

TCO A: Work Breakdown Structure (WBS) for Manufacturing Facility Project