Historic Cost Perspectives
This is why we have examined the projection of economic indicators from the past, by using regression methods and then comparing the results with the actual data. In plain words, we have put ourselves in the past, with the data available at that time, together with the technology and mathematic models available today. This is to understand how the projected data could be different from the real ones. Several simulations were undertaken, and from those we show the results of two.
To be honest, those simulations are relevant to time spans of high turbulence due to the presence of the World Wars and other events. But who knows what will happen in the next 60 years?
The first simulation was made putting ourselves in 1891, based on data from 1861 to that time and using linear regression for a hypothetical project due to last until 1921 (30 years). The actual cost was about four times the estimated cost. Not so bad considering that in reality, during the 30 years considered, the years from 1891 until 1912 were a time of stability. However, from 1912 to 1921 we had progressive instability and the First World war that itself was a fully unbelievable event in 1891.
The second simulation, prepared for the World Congress, was made by putting ourselves in 1951, based on data from 1861 and using exponential regression, for a hypothetic project due to last until 2011 (60 years). The actual cost was 35 times the estimated cost. This seems a very poor result considering that in the previous case we had no major wars in the time span considered, only instability and inflationary outbreaks.