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estimating-methodologies.md

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+# Estimating Methodologies
+
+## The 4 Traditional Methodologies
+
+> [!quote] Defense Acquisition University
+> There are four principal cost estimating methodologies:
+> 1. Comparison/analogy,
+> 2. Parametric,
+> 3. Detailed engineering/bottom up, and
+> 4. Extrapolation from actual costs.
+
+### Comparison / Analogy
+
+**Pros:**
+* simple to implement
+* quick in practice
+
+**Cons:**
+* unsatisfying input
+* unsatisfying output
+--
+
+### Parametric
+
+**Pros:**
+* quick in practice
+* nuanced input
+* accounts for incomplete input
+* effectively accurate through the entire estimate process
+* well-suited for automation
+
+**Cons:**
+* complex to implement
+
+### Detailed Engineering / "Bottom-Up"
+
+**Pros:**
+* simple to implement
+* satisfying output
+
+**Cons:**
+* slow in practice
+* unsatisfying input
+* accuracy and risk depend solely on estimator
+* output dependent on complete input
+* ill-suited to automation
+
+### Extrapolation from Actual Costs
+
+Depending on the application this is one is either
+* better described as the previous 3
+* or not estimating at all.
+
+## In Other Industries
+
+There exist articles from software development project management resources
+stating essentially what I believe to be true,
+that parametric estimating is _more_ accurate than bottom-up,
+in contrast to common assumption.
+
+I suspect that industry tolerance for cost-modeling
+is related to the cost of estimation.
+Software is largely impractical to estimate bottom-up,
+whereas anyone can take off construction scope.
+
+Alternate theory:
+tolerance is related to the industry's ability to understand the model.
+
+Regardless, a continuum emerges:
+
+```
+^
+| Software
+| Defense
+| Construction
+v
+```
+
+Industries that would benefit the most from cost-modeling
+are least likely to consider it a valid method.
+
+These methods are actually the same, just different levels of abstraction.
+This can be observed in the _very_ subtle distinction
+between parametric and analogous estimating,
+which also exists in my history-oriented/risk-oriented definitions.
+
+```
+# of Parameters
+^
+| Bottom-Up     (100+)
+| Parametric     (10)
+| Analogous       (1)
+| Extrapolation   (0)
+```
+
+These different methods are just a response
+to different levels of requirement specificity.
+Parametric is obviously more accurate and precise than analogous,
+however the question not being asked
+is if there are diminishing returns to estimate specificity.
+
+Suppose there are, at some point then,
+there must then be a point at which **risk of human error**
+outweighs the value of more perfect information.