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INDEX
Note: page numbers suffixed ‘n’ indicate a reference to a footnote.
achievability 9
acquisition and use of property 69-71
‘Adding it Up’ 7n
additionality 52-4, 101
adjustments 24-6

for market distortions 21
for optimism bias 30, 85-6
for taxes 28
for variability 88-9
see also distributional weights; weighting and scoring
adverse selection 52, 101
affordability 9, 19, 39, 101
aggregates 67
agri-environment schemes 65
agricultural land 70
air quality 9, 61, 64-5
amenity values 66, 70

see also social costs and benefits
anti-discrimination law 94-6
appraisal 3-10

compared to evaluation 47-8
definition 2, 101
appraisal period 19
appraisal reports 6
archives 7
assessment, definition 1n, 101
asymmetry of information 52, 101, 102
auditors 7

see also National Audit Office
 
base case 5, 5n, 17-36, 101
benefit categories 44
benefit transfer method 21, 65
benefits see costs and benefits
benefits realisation management 44
best option 5, 37-9
bias 4, 28, 29-30, 85-7

see also optimism bias
biodiversity 66
budget statements 39
building see construction
buildings see construction projects; land and property
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cancellation costs 21
capital charges 21
capital costs 85, 101
capital values 69, 71
capital works duration 96
carbon emissions 64n
carbon savings 64
cashflow statements 39
cashflows 19
casualties 61-2
catastrophe risk 97
Centre for Management and Policy Studies (CMPS) 7n, 8, 10
checklist of issues 9-10
choice modelling 57, 57n, 101
climate change effects 64
commercial arrangements 9, 41-2
construction projects 43, 62-3, 87-8

see also capital works duration; land and property
consultation

creating options 17
developing and implementing solutions 5, 37, 40
risk mitigation 81
see also specialist advice
consumer focus 10
contingency, definition 101
contingent liabilities 21
contingent ranking and contingent rating 57n, 101
contingent valuation 57, 63, 65, 101

see also willingness to accept; willingness to pay
contract cancellation costs 21
contract management 9, 44
contractual arrangements for risk mitigation 81
cost-benefit analysis 9

best option selection 37, 38
definition 4, 101
evaluation 45
land and buildings 77
see also distributional analysis
cost-effectiveness, land use 72-7
cost-effectiveness analysis

best option selection 37, 38
definition 4, 101
health benefits valuation 60
cost categorisation 20
cost estimation 20-1

see also plausible estimates
cost of capital, definition 101
cost of retention, vacant land 72
cost of variability in outcomes 88-9, 101
cost utility 60n
costs and benefits 6, 19-26, 59-67

see also additionality, disamenity impacts; displacement;

distributional impacts; employment impacts; environmental impacts; non-market impacts; operating costs and benefits; structural impacts; supply-side impacts; unvalued costs and benefits; valuation
creation of options 5, 17-19
critical success factors 35
crowding out 53, 101

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data 4

see also information
deadweight 53, 54, 101
deaths, prevented 61-2
decision guidelines 37-9
decision to proceed 6, 32, 38, 42
decision trees 31-2
Department for Transport 59, 62
depreciated replacement cost (DRC) 71
depreciation 21
design flexibility 81
design quality 10, 35, 62-3
Design Quality Indicator (DQI) 35
diminishing marginal utility 24, 65, 101
disability discrimination law 94-6
disamenity impacts 67
discount rate 26-7, 97-100, 102

see also internal rate of return (IRR)
discounted cash flow (DCF), definition 102
discounting 26-8, 101

see also discount rate
discrimination law 94-6

see also equality
displacement 53-4, 53n

definition 53, 102
regeneration projects 55
disposal of property 72
dissemination of results 7, 47
distance decay 65, 65n
distributional analysis 24-5, 91
distributional impacts 9, 91-6
distributional objectives see equality
distributional weights 24, 92-4

see also weighting and scoring
do minimum option

creating options 17
definition 102
in large or complex projects 87
shortlisting 5, 19
do nothing case 47, 53
dual cost analysis 20
dust 67
 
economic cost see opportunity cost
economic efficiency 51-2, 102
effectiveness

definition 102
see also cost-effectiveness
emissions 64-5
employees’ time 20, 59-60
employers’ time 59
employment impacts

regeneration projects 55
see also displacement
environmental impacts 9, 19, 63-7, 70
Environmental Landscape Features (ELF) model 65
equality 9, 11, 24, 52

see also discrimination law; distributional analysis
equity see equality
equity value of time-savings 59
equivalisation 91-2
estimation

benefit values 21-2
costs 20-1
see also plausible estimates
European Union 10, 56
EuroQol instrument 60
evaluation 4-10, 45-9

cycle of appraisal and 3
definition 2, 102
performance data capture 42, 43
planning for 2
existence value 88, 102
expected value (EV) 30, 31, 102
externalities 51
externality costs or benefits, definition 102

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fatalities, prevented 61-2
financial appraisal, definition 102
financial arrangements 9
financial reporting 44
financial statements 39
fixed costs 20, 32
forests, amenity and recreational values 66
free-riding 51
freehold property 69, 72
full economic cost 20
full time equivalent (FTE) costs 20
funding statements 39
 
GDP deflator 102
gender discrimination law 94-6
greenhouse gas emissions 64
growth, per capita consumption 97, 98
 
health and safety 10
health benefits 60-1
health issues 10
hedonic pricing 23, 57, 57n, 102
hurdle rates see minimum internal rate of return (IRR)
 
impact statement, definition 102
impacts see costs and benefits; risks
imperfect information 52
implementation 42-4, 102
inflation 25-6
information 52

see also data
information asymmetry 52, 101, 102
information management and control 9
injuries 61-2
Integrated Policy Appraisal (IPA) 6, 6n
internal rate of return (IRR) 39, 39n, 102
international development assistance projects 99
intervention, rationale for 4, 11-12, 26, 51-6
irreversibility, definition 103
irreversible decisions 81
irreversible risk 88

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justifying action see rationale for intervention


land and property 9, 69-77

see also construction projects
landscape 65
leakage 53
leasehold property 69, 71, 72
leases and rents 71-2
legislation 9, 56-7, 94-6
long-term discount rates 98-9
 
McClements scale 91
management

of appraisals and evaluations 7
see also benefits realisation management; contract management; information

management and control; programme and project management; risk
management
marginal utility

definition 24, 103
deriving distributional weights 93-4
landscape 65
social time preference rate 97, 98
marital status, discrimination law 94-6
market failure 11, 51, 52, 103
market power 52

see also monopoly suppliers
market prices see prices
market rents see rents
market value 69, 70, 103
maximin return 38
measurement

emissions and climate change effects 64-5
non-market impacts 57-67
performance 43
unvalued costs and benefits 34-6
see also valuation
million tonnes of carbon-dioxide equivalent (MtCO2) 64
minimum internal rate of return (IRR) 39n, 56
minor injuries 62
monitoring 21, 43
monopoly suppliers 21

see also market power
Monte Carlo analysis 33, 87-8, 103
moral hazard 52, 103
multi criteria analysis see weighting and scoring
multipliers, assessment of additionality 54
 
National Audit Office 7, 82
net present value (NPV) 26

adjustment for optimism bias 86
best option selection 37
calculation 28
definition 103
distributional analysis 91
internal rate of return (IRR) 39
property valuation 69
noise 9, 66, 67
non-excludable public goods 51
non-fatal casualties 61-2
non-market impacts 57-67
non-rival public goods 51
non-UK residents and firms 21n
non-working time 59

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objectives

evaluation 46, 47
regeneration projects 55
setting 4, 13-15
see also outcomes
odours 67
Office of Government Commerce (OGC)

business case templates 7n
construction project management 43n
contract management 44
Gateway review process 8
procurement options 42
project management 43
property disposal 72
risk management 80, 82
open market value 70, 71
operating costs and benefits 86
opportunity cost

capital assets 21
definition 102, 103
land 72
valuation of options 19, 20, 21
valuation of time 20, 59
optimism bias 29-30, 85-7, 103
option appraisal 3, 5, 17-36

definition 103
issues 9
see also adjustments; best option; unvalued costs and benefits; valuation
option value 88, 103
outcomes

cost of variability 88-9, 101
definition 13
evaluation 46
examples 14-15
regeneration projects 55
valuation of risks 30
see also objectives
outputs

additionality 53-4
definition 13
evaluation 46
examples 14-15
range of possible 6
outturns see evaluation
over-rented properties 71
own time 59
 
paired comparisons 57n, 101
partnerships 9, 42, 55
Partnerships UK 42
passing rents 71
pay back period 39, 39n
per capita consumption, growth 97, 98
performance criteria 35
performance management and measurement 43
pilot studies 81
plausible estimates 22, 59-63
pollution see air quality; noise; water quality
precautionary principle 81, 103
predatory pricing 52
present value

definition 103
see also net present value (NPV)
presentation of results 6, 47
prevented fatalities and prevented injuries 61-2
price index, definition 103
prices

adjustment for changes in 25-6
adjustment for taxes 28
valuation of costs and benefits 19, 21-2
pricing 27

see also hedonic pricing; predatory pricing
PRINCE2 43
Private Finance Initiative (PFI) 103

adjustments for taxation differences 28
procurement process 42
risk transfer 41, 84
private sector 37, 40-2, 56, 83-4
procurement 5, 9, 40-2, 81
profit rents 71
programme, definition 1n
programme and project management 37, 42-3
project plans 7
property 62-3, 69-77
proposal, definition 103
public goods 51
Public Private Partnership (PPP) 42, 103
public sector comparator, definition 104
pure time preference 26, 97, 104

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quality assurance 7
quality-adjusted life year (QALY) 60
quantification see measurement; valuation
quarries 67
 

racial discrimination law 94-6
rationale for intervention 4, 11-12, 26, 51-6
real option theory, definition 104
real price, definition 104
real terms, definition 104
recreational values 66
redundancy payments 21, 21n
regeneration projects 24, 54-6
regional perspectives 10, 94
regulations 8, 9, 42, 56
Regulatory Impact Assessment (RIA) 8
relative price changes 25-6
relative price effect, definition 104
relative prosperity 24, 91-4
relevant cost/benefit, definition 104
rental values 69
rents 71-2
reports 6, 44, 46, 47
required performance criteria 35
required rate of return (RRR) 27, 104
research

creating options 17
measuring non-market impacts 58, 59-63
measuring unvalued costs and benefits 34
preliminary 4, 11
valuation of environmental impacts 63-7
valuation of options 22
residual values 21
resource budgets 19
resource costs 19, 104
resources, definition 104
results, presentation 6, 47
retention of vacant land 72
revealed preference 23, 57, 58

definition 104
relative price changes 25
value of a prevented fatality (VPF) 62
see also hedonic pricing; willingness to pay
risk, definition 104
risk allocation tables 84
Risk Analysis and Management for Projects (RAMP) 82
risk log see risk register
risk management 29, 41-2, 79-82
risk modelling see Monte Carlo analysis
risk premium 30
risk register 80, 104
risks 4, 79-89

best option selection 38
prevention and mitigation 29, 34, 41, 80-2
transferring 41, 82-4
valuation 29, 30-2
see also catastrophe risk; irreversible risk; Monte Carlo analysis;

systematic risk
road schemes, valuation of time 59-60
ROAMEF (Rationale, Objectives, Appraisal, Monitoring, Evaluation, Feedback)

cycle 3
rural areas 9

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sale of property 72
scenarios 6, 33
scoring see weighting and scoring
semi-fixed costs, definition 20
semi-variable costs 20, 32
sensitivity analysis 32-3

additionality assessment 53
adjustments for optimism bias 29
adjustments of operating costs and benefits 86
cost categorisation 20
definition 104
discount rates 99
estimated benefit values 22
leases and rents 72
Monte Carlo analysis inputs 87
reporting results 6
residual values 21
shadow price, definition 105
shortlisting options 5, 19
sites see land and property
SMART targets 13-14
smells 67
social benefit, definition 105
social cost, definition 105
social costs and benefits 19, 69, 70

see also amenity values
social time preference 25, 97-8
solutions, developing and implementing 5, 37-44
specialist advice 7

Monte Carlo analysis 33
procurement 42
property disposal 72
property valuation 69-70, 71
relative price changes 26
valuation of costs and benefits 20, 21
see also consultation
staff time 20, 59-60
state aids 56
stated preference 23, 57, 57n, 58

definition 105
relative price changes 25
value of a prevented fatality (VPF) 62
see also willingness to pay
step costs 20, 32
strategic impact of proposals 9
structural impacts 52-3
subsidies 21, 70
substitution, definition 53, 105
summary data 4
summary reports 6, 47
sunk costs 20
supply-side impacts 52-3
switching point or switching value 32, 58, 105
systematic risk, definition 105

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targets 4, 13-14, 46
taxes 21, 28
time preference rate 26, 97, 105
time valuation 59-60
total economic value, definition 105
traffic disturbance 67
transfer payment, definition 21n, 105
transferring risk 41, 82-4
transport schemes, valuation of time 59-60
 
UK Climate Impacts Programme (UKCIP) 64
uncertainty 4, 32-3, 79-89

definition 105
long-term discount rates 98
unvalued costs and benefits 22, 34-6, 38
use value, definition 105
 
vacant land 72
valuation 19-23

decision to proceed 38
design quality 62-3
disamenity impacts 67
environmental impacts 19, 63-7, 70
health benefits 60-1
injuries and casualties 61-2
land and property 62-3, 69-77
non-market impacts 57-67
time 20, 59-60
see also adjustments; contingent valuation; measurement
valuation adjustments see adjustments
valuation techniques 23

see also revealed preference; stated preference; willingness to accept;

willingness to pay
Value Added Tax (VAT) 28
value of a prevented fatality (VPF) 61-2
variability adjustments 88-9
variable costs 20, 32
visual intrusion 67
 
waste 9, 67
water quality 9, 65
weighting and scoring 35-6, 38, 58, 58n, 105

see also distributional weights; expected value
willingness to accept 23, 57-8, 105

see also contingent valuation
willingness to pay 23, 57-8

agri-environment schemes 65
amenity and recreational values of forests 66
definition 105
health benefits 60
prevented fatalities and prevented injuries 61-2, 62n
see also contingent valuation; revealed preference; stated preference

working time 59
works duration 86

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