The prepositional phrase "by using the traditional field measurements method" belongs to "The estimation". In the first example, you have moved the predicate "is difficult" in-between them, so the prepositional phrase becomes stranded and the reader tries to parse the sentence as if it belonged to the predicate instead. In other words, the second sentence is parsed as:
2. [The estimation [of X] [by Y]] [is difficult].
While the first sentence is parsed as:
1. [The estimation [of X]] [is difficult [by Y]].
And that's when the latter falls apart, because "to be difficult by condition" is ungrammatical; you have to use "to be difficult when condition" instead.
So, here are your actual choices:
- The estimation of these attributes is difficult when using the traditional field measurements method, which is rather expensive and time-consuming.
- The estimation of these attributes by using the traditional field measurements method is difficult, rather expensive and time-consuming.
Another point to note is, of course, that in (1) it is the method that is expensive and time-consuming, while in (2) it is the estimation. I suppose it doesn't make a real difference in your case (because the expenses and the time consumption propagate from the method used to the estimation process as a whole, so it makes sense either way), but in general this is something to keep an eye on.
Lastly, note that you were missing a definite article in both cases, which I silently corrected in my answer.