The technique used to develop a budget based on historical data is called the analogous estimating technique. The factors that may affect the reliability of such a technique are the following:
- The current project is being compared to non-similar projects.
- The team members working on the previous project are not the same (for example, you had a very high performing team working on the previous projects - which is not the case anymore)
- The project manager is not the same one.
- The organizational structure in the company has changed. (for example, resources are no longer dedicated to a single project anymore)
- The size/culture of the company has changed.
- The technology used for the current project is different (although the objectives and the goal are similar to previous projects)
- The vendors have changed.
All in all, the main reason that affects the reliability of a budget developed using historical data is change!