The uncertainty about the future yearly Pax is quite high. With this as the backcloth for airport planning the stochastic nature of Pax forecasts has to be taken into account when investment decisions are to be made.
Traditionally, when estimating costs, project value, equity value or budgeting, one number is generated – a single point estimate.
Most companies have some sort of model describing the company’s operations. They are mostly used for budgeting, but in some cases also for forecasting cash flow and other important performance measures.