CAPM Predictive Plan-Based Methodologies Practice Question
A company is undertaking a new office building construction project using a predictive (waterfall) methodology. The project is in the planning phase. The project sponsor requires a cost estimate accurate within ±10% to secure funding. The project team has limited historical data because the company specializes in residential projects, and this is the first commercial high-rise they have attempted. The project manager has experience with parametric estimating but wonders if it is appropriate. Meanwhile, a senior team member suggests bottom-up estimating, but that would require detailed design, which is not yet complete. Another team member advocates three-point estimating to account for uncertainty. The project manager must choose the best estimation approach for the current phase given the constraints.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
Use parametric estimating based on industry benchmarks for commercial construction.
Parametric estimating using industry benchmarks is the best option to achieve ±10% accuracy with limited data. Three-point estimating (A) is a technique for quantifying uncertainty but does not inherently improve accuracy without reliable inputs. Analogous estimating (B) from residential projects is not appropriate due to significant differences in scope and complexity. Bottom-up estimating (C) requires a detailed WBS and design, which are not yet available in the planning phase. Therefore, parametric estimating (D) is the most suitable approach given the constraints.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Use three-point estimating to combine optimistic, pessimistic, and most likely costs.
Why it's wrong here
Three-point estimating still requires underlying data (e.g., parametric or analogous) and does not provide ±10% accuracy without data.
- ✗
Use analogous estimating from similar residential projects.
Why it's wrong here
Residential projects are not similar to commercial high-rise, so analogous estimating would be inaccurate.
- ✗
Use bottom-up estimating after completing the work breakdown structure down to work packages.
Why it's wrong here
Bottom-up requires detailed design and is not feasible in planning phase when design is incomplete.
- ✓
Use parametric estimating based on industry benchmarks for commercial construction.
Why this is correct
Parametric estimating using industry benchmarks can provide reasonable accuracy with limited historical data. This is feasible given the lack of in-house data.
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