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Inaccurate Historical Data Usage

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Definition:
Relying on outdated, incomplete, or non-representative historical data to estimate project costs and timelines.

Key Components:

  • Data Validation: Ensuring past data is accurate and applicable.
  • Project Similarity Check: Confirming past projects are comparable.
  • Market Adjustment Factors: Updating costs for inflation and market shifts.

Use Cases/Industries:

  • Construction: Using old labor productivity rates for new projects.
  • Energy Development: Comparing outdated fuel price forecasts.
  • Manufacturing: Relying on past material costs that are no longer valid.

Advantages:

  • Can Provide Insight: If well-maintained, historical data aids planning.

Challenges:

  • Risk of Misinformation: Inaccurate data can mislead budgeting.
  • Needs Continuous Updating: Requires ongoing adjustments for market conditions.

Related Terms:
Benchmarking, Data Integrity, Cost Forecasting

Example:
A solar farm developer underestimated project costs by 12% due to reliance on outdated labor rates from previous projects.

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Synonyms:
Flawed Data Analysis, Outdated Cost Assumptions, Misleading Benchmarking
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