GPS-synchronized equipment (PMUs) is in general higher precision equipment as compared to typical SCADA systems. Conceptually, PMU data are time tagged with accuracy of better than 1 microsecond and magnitude accuracy that is better than 0.1%. This potential performance is not achieved in an actual field installation due to errors from instrumentation channels and system imbalances. Presently, PMU data precision from substation installed devices is practically unknown. On the other hand, specific applications of PMU data require specific accuracy of data. Applications vary from simple system monitoring to wide area protection and control to voltage instability prediction. Each application may have different accuracy requirements. For example for simple system monitoring in steady state highly accurate data may not be critical while for transient instability prediction high precision may be critical. For addressing data precision requirements for a variety of applications, it is necessary to quantify the accuracy of the collected PMU data. We discuss data precision requirements for a variety of applications and we propose a methodology for characterizing data errors. In particular, we propose a new approach for improving data accuracy via estimation methods. The proposed methodology quantifies the expected error of the filtered data. Examples are provided that define the instrumentation requirements for specific applications.