Hello Tom,
During photo alignment PhotoScan estimates internal and external camera orientation parameters based on the image data alone. The final estimates may contain errors, which can lead to non-linear deformation of the final model.
Georeferencing is performed by estimation of 7 parameters similarity transformation (3 parameters for rotation, 3 for translation and 1 for scaling). Such transformation can't remove non-linear deformations of the model, and that is usually the cause of georeferencing errors.
To solve the problem there is an optimization feature, introduced starting from 0.8.4 PhotoScan version. It optimizes camera parameters using known ground control data and usually helps to decrease georeferencing error significantly. This feature is available from the Ground Control dialog.
Please check updated PhotoScan user manual for more information about optimization function:
http://downloads.agisoft.ru/photoscan/doc/en/pscan_pro.pdfPhotoScan 0.8.4 is currently in pre-release stage and can be downloaded from our forum:
PhotoScan 0.8.4 pre-release verison