Uncertainty

Abstract

The techniques of project analysis have been considered so far as if the basic data which they have used are known with certainty. However, both technical and economic information is used in the form of forecasts and is subject to considerable uncertainty. It is possible to conceive of different values, based on experience, for the fundamental technical relations in any productive process, and for the project costs and benefits at either market or shadow prices. For most project data, a range of values can be found or predicted, yielding the possibility of different conclusions in the application of project worth measures.