Regardless, all project managers will follow similar plans to try and create the most reliable estimates. Here are three common methods used:
1. Parametric Estimation
This is one of simplest methods that estimates projects on a quantitative basis, such as dollars per square feet or number of installations per day. But not everything can be quantified, which leaves some gaping holes in your estimation
2. Analogous Estimation
This method is based on historical information of past projects. It's generally used early on when much is not known about a project. Analogous estimations will use time or cost in similar projects to create a new estimation. It's a quick and relatively easy method of estimating, although not the most accurate.
3. Bottom-up Estimation
This is the most accurate, but also the most time-consuming form of estimating since it requires breaking down each project task into smaller components, such as scope and deliverables. The estimates for the smaller chunks are combined to create a larger estimate for the entire task as a whole.
Project manager blog 4pm then suggests using a 3-point estimation formula where each team member provides their "pessimistic, optimistic and best guess estimates for the calculations for the specific scope and deliverable they're responsible for in a project."