An impact arising from an intervention is additional if it would not have occurred in the absence of the intervention

An assessment of whether the proposals can be paid for in terms of cash flows and resource costs - see financial case

The process of defining objectives, examining options and weighing up the costs, benefits, risks and uncertainties of those options before a decision is made

Either an appraisal or an evaluation (or both)

See Best and final offers

The best estimate of how much a proposal will cost in economic terms, including an allowance for risk and optimism.

Term used in procurement to indicate that no further negotiation on the amount or terms is possible. A BAFO is issued often in response to the request a principal (customer) sends to those contractors or suppliers whose bids are within a close range of one another

Business Justificatiopn Case

A management vehicle for scoping and planning the proposal and documenting the outcome. Often a requirement of the approval process

Expenditure on durable assets such as land, buildings and equipment

see Cost benefit analysis

See Cost effectiveness analysis

An allowance of cash or resources to cover unforeseen circumstances

Analysis which quantifies in monetary terms as many of the costs of a proposal as feasible (financials), including items for which the market does not provide a satisfactory measure of economic value (non-financials)

Analysis that compares the cost of alternative ways of producing the same or similar outputs

Design, build, funding and operational phases of the proposed scheme

See Discounted cash flow

The annual percentage rate at which the present value of money, or other unit of account, is assumed to fall away over time

A technique for appraising investments. It reflects the principle that the value to an investor of a sum of money depends on when it is received.

A method used to convert future costs or benefits to present values using a discount rate

An option where the public sector takes the minimum amount of action necessary

The cost of the status quo, often used as a benchmark for VFM.

See Equivalent annual cost

See appraisal. This specifically takes into account the economic costs. Also used as a general term to cover cost benefit analysis

A measure of the extent to which the costs associated with a project, programme or policy are reduced

A measure of the extent to which a project, programme or policy achieves its desired outcomes/outputs

A measure of the extent to which a project, programme or policy’s associated throughputs are increased

The constant annual costs which are equivalent (same present value) to a project’s actual costs.

Retrospective analysis of a project, programme or policy to assess how successful (or otherwise) it has been, and to learn lessons for future improvement

The weighted average of all possible values of a variable, where the weights are the probabilities (in %s)

Full Business Case

A systematic framework for the development and the presentation of the business case over time (SOC, OBC and FBC).

The discount rate that would give a project a present value of zero

See Internal rate of return

The price at which a commodity can be brought or sold, determined by the interaction of buyers and sellers in a market

Most Economically Advantageous Tender

A technique that allows assessment of the consequences of simultaneous uncertainty about key inputs, taking account of correlation between these inputs

The discounted value of a stream of future costs

The discounted value of a stream of either future costs or benefits. The NPV is used to describe the difference between the present value of a stream of costs (NPC) and a stream of benefits

See Net present cost

See Net present value

Outline Business Case

The value of the most valuable alternative uses or the cost of something in terms of an opportunity forgone

The demonstrated systematic tendency for appraisers to be over-optimistic about key project parameters, including capital costs, works duration and benefits realisation

The process of defining objectives, examining options and weighing up the costs, benefits, risks and uncertainties of those options before a decision is made.

A systematic framework for the development of options

See Project Evaluation Review

See Private Finance Initiative

See Post-Implementation Review

A review after implementation of goods and services acquired through a project to appraise whether this project has delivered its anticipated improvements and benefits

Public private partnerships

A review at the end of a project to assess the conduct of all aspects of the project with a review to improving the design, management and implementation of future schemes

An idea for a policy, programme or project that is under appraisal

See Public Sector Comparator

A hypothetical risk-adjusted costing by the public sector as a supplier to an output specification, generally used in connection with a PPP procurement exercise. More generally, a reference project against which other proposals can be compared.

A target average rate of return for a pubic sector trading body, usually expressed as a return on the current cost value of total capital employed

The inference of willingness to pay for something which is non-marketed by examining consumer behaviour in a similar or related market

The likelihood (measured by its probability) that a particular event will occur.

Analysis of the effects on an appraisal of varying the projected values of important variables

Strategic Outline Case

The point at which the choice of the preferred option would switch to another option due to any uncertain costs and/ or benefits

A payment for which no goods or services are received in return

A scenario within which it is impossible to attach probabilities to the range of possible outcomes.

See Value for Money

An appraisal technique for the assessment of qualitative costs, risks and benefits

The amount that someone is willing to receive or accept to give up a good or service

The amount that someone is willing to receive or accept to give up a good or service.