CAPM Practice Question: Project Management Fundamentals and Core Concepts
The sponsor is concerned about the accuracy of cost estimates prepared using analogous estimating. Which estimating technique should the project manager recommend to improve accuracy?
⚠ Common exam trap
CAPM often tests the accuracy hierarchy of estimating techniques; candidates must remember bottom-up is most accurate but time-consuming, while analogous is least accurate and quickest.
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
✓
Bottom-up estimating
Bottom-up estimating involves estimating individual work packages or activities in detail and then aggregating them to obtain a total project cost. It is the most accurate estimating technique because it relies on detailed, granular data. Analogous estimating, by contrast, uses historical data from similar projects and is less accurate. Therefore, bottom-up estimating is the best recommendation to improve accuracy.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Reserve analysis
Why it's wrong here
Reserve analysis adds contingency buffers to an existing estimate; it does not improve the underlying estimating accuracy the sponsor is questioning. It is tempting because it addresses cost uncertainty, and it would be the right choice when the concern is covering identified risk rather than refining the estimate itself.
- ✓
Bottom-up estimating
Why this is correct
Bottom-up estimating aggregates individual work-package costs, giving granular detail that analogous estimating lacks. This directly addresses the sponsor's accuracy concern by reducing reliance on historical similarity, satisfying the stem's requirement to improve estimate precision. It is the most accurate technique, though costlier in time.
- ✗
Parametric estimating
Why it's wrong here
Parametric estimating still relies on historical data and unit rates, so its accuracy depends on the same underlying assumptions as analogous estimating; bottom-up estimating aggregates individual work packages for greater precision. It is tempting because parametric uses statistical relationships, and would be correct when reliable unit-rate data exists.
- ✗
Three-point estimating
Why it's wrong here
Three-point estimating captures optimistic, pessimistic and most likely values to model uncertainty, but it still relies on judgement rather than historical data relationships. It is tempting because it quantifies risk, and it would be correct when the sponsor wants a probability-weighted estimate for an uncertain, novel activity.
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Same concept, more angles
1 more way this is tested on CAPM
These questions test the same concept from different angles. Work through them to make sure you can recognise it however the exam phrases it.
Variation 1. Which THREE are techniques used for estimating activity durations?
hard- ✓ A.Three-point estimating
- ✓ B.Parametric estimating
- C.Reserve analysis
- D.Monte Carlo simulation
- ✓ E.Analogous estimating
Why A: Three-point estimating (A) is a recognized duration-estimation technique that uses optimistic, most likely, and pessimistic estimates (often via PERT beta or triangular weighting) to derive an expected duration and uncertainty range. Parametric estimating (B) is also a valid duration-estimation technique: it applies a statistical relationship between historical data and variables (e.g., hours per unit × number of units) to calculate activity durations. Analogous estimating (E) is likewise a standard duration-estimation technique that uses historical duration data from a similar, previously executed activity or project, typically at lower cost and accuracy. Reserve analysis (C) is not a duration-estimation technique; it is used to determine contingency reserves for schedule or cost and belongs to the Estimate Activity Durations/Determine Budget processes as a reserve-setting activity, not an estimating method. Monte Carlo simulation (D) is a quantitative risk-analysis technique (schedule/cost simulation) used to model overall project duration or cost distributions, not one of the PMBOK-listed activity duration-estimation techniques.
JA
Written and reviewed by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
Last reviewed September 2026 · checked against the official PMI exam blueprint
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