Answers in the wind

Project valuation means making calculated assumptions that aren’t always accurate. Brett Humphreys discusses the assumptions that may be embedded within a valuation and how these assumptions can affect the final value

Project valuations are always tricky problems. Invariably time is short and the value needs to be determined quickly. The modeller must therefore make assumptions and take shortcuts to reach a final valuation by the deadline. Experienced modellers usually recognise the assumptions embedded within their models and the explicit trade-off between more accurate valuations and either increased calculation time or difficulty of implementation. However, occasionally the modeller does not recognise