Final answer:
Top-down estimating is effectively used when it involves historical project data, contrasting with bottom-up estimates that start with detailed WBS items. The best answer among the options provided is number 4, which relies on historical data for estimating, aligning with the top-down approach.
Step-by-step explanation:
When estimating project costs and durations, top-down estimating is an approach that begins with the highest level of the project and breaks down costs from there. This method can be particularly effective when there is a historical database of project costs and durations to refer to. Indeed, option 4, which suggests estimating based on historical data, aligns well with the top-down approach because it allows project managers to leverage past experiences, adjust for the current project's unique factors, and thus produce more accurate and reliable estimates.
The top-down estimating process typically uses the overall project parameters and breaks them into smaller components, at which point historical data from previous similar projects or standardized formulas may be applied. This approach contrasts with bottom-up estimating, which starts at the lower levels of the work breakdown structure (WBS) and aggregates costs upward. Hence, option 1 would not be true to the top-down method's nature, nor would options 2 or 3, as they do not involve the top-down philosophy.