4.24 The main steps in longlist appraisal are highlighted in Box 8 below. Use of the options framework-filter is required best practice for consideration of a longlist of possible options. The method disaggregates the design of viable options into its basic components, breaking down the choices to be made into a sequence of logical steps. This helps to avoid falling into the trap of making unconscious implicit and unconsidered assumptions. It does so by requiring the information and assumptions required at each step to be cited and explained. By their nature implicit assumptions are unconsidered and untested because they are implicit and virtually invisible. They are invariably the seeds of cost escalation, time delays, under delivery and often outright failure, because they have not been considered and tested.
4.25 The options framework-filter provides a structured process that supports a constructive engagement with stakeholders and experts, and it focusses on the choices needed to construct viable options. A workshop facilitated by an experienced accredited person is required to undertake the longlisting. The workshop or workshops bring together the knowledge and expertise of all of the professions involved in reviewing the longlist developing the shortlist, together with key stakeholders or their representative organisations. Ideally the senior responsible
carried out in a way that is proportionate to the likely costs and risks involved to the public and the public sector. In some cases, it may be necessary to hold more than one such workshop and to take the review and shortlisting process in stages.
4.26 This process makes use of indicative cost and likely benefit estimates. While not accurate enough to define the final option, they should be good enough to support selection of a viable shortlist. An option that only meets the core “Business Needs” previously identified as the internal changes needed to meet the core requirement of achieving the SMART objectives, is known as the “Do Minimum” option. The do minimum does not take advantage of any opportunities for additional changes that may occur. It may or may not, be the option eventually chosen, but it is essential because it provides a second important benchmark that can reveal the real value of additional changes. Comparison with the “Do Minimum” option reveals whether options that take advantage of additional opportunities to make changes are worthwhile or not. If comparison with the “Do Minimum” reveals that they add more cost and risk than they add value, they are regarded as likely to be pointless “gold plating”. However, this may not be the case where there is a widely recognised benefit that is not readily or credibly quantifiable or monetisable. Paragraph 4.14 above on choices with unquantifiable and unmonetizable benefits explains this.
Box 8. Navigating the Appraisal Framework and the Longlist Rationale for intervention
¨ conduct the strategic assessment, research and understand the current position – Business As Usual
¨ establish rationale for intervention including the Evidence based Logical Change Process
¨ determine whether Place Based, Equalities, and/or Distributional Appraisal is required
¨ ensure Strategic Fit and identify SMART objectives (outcomes and outputs) for intervention Longlist appraisal
¨ identify Constraints and Dependencies
¨ consider Place Based, Equalities, and/or Distributional objectives
¨ identify Critical Success Factors (CSFs)
¨ consider unquantifiable and unmonetisable factors
¨ consider a longlist of option choices with the Options Framework-Filter
¨ consider Place Based, Equalities, and Distributional effects
¨ using the Options Framework-Filter create a viable shortlist and preferred way forward Shortlist appraisal
¨ select Social Cost Benefit Analysis or Social Cost Effectiveness Analysis
¨ identify and value costs and benefits of all shortlisted options
¨ estimate the financial cost to the public sector
¨ ensure all values in the economic dimension are in real base year prices with inflation removed
¨ qualitatively assess non-monetisable costs and benefits
¨ apply appropriate Optimism Bias
¨ maintain Risk and Benefits Registers
¨ assess Avoidable, Transferable and Retained Risk, build in additional Risk Costs and reduce Optimism Bias accordingly
¨ sum the values of costs and benefits in each year
¨ discount the yearly sums of costs and benefits in each year to produce Net Present Social Values (NPSVs)
¨ add the NPSVs over time to produce The Net Present Social Value (NPSV) of each option
¨ calculate BCRs if using CBA or Social Unit Costs if using CEA as appropriate Identification of the preferred option
¨ identify preferred option considering NPSV, BCR, unmonetisable features risks and uncertainties
¨ conduct sensitivity analysis and calculate switching values, for each option Monitoring and evaluation
¨ during implementation – inform implementation and operational management
¨ in the operational phase – inform both operational management and evaluate the outcome and lessons learned to improve future decisions.
4.27 “Critical Success Factors” (CSFs) are the attributes that any successful proposal must have, if it is to achieve successful delivery of its objectives. A table of five basic CSFs that apply to all proposals is given in Box 9. In some cases, one or at most two addition factors may be added, but if a proposal’s objectives, constraints and dependencies are correctly understood this is rarely the case, at most the number should not exceed seven.
Box 9. Critical Success Factors
Key Critical Success Factors Description Strategic fit and meets
business needs
How well the option:
¨ meets the agreed spending objectives, related business needs and service requirements
¨ provides holistic fit and synergy with other strategies, programmes and projects
Potential Value for Money How well the option:
¨ optimises social value (social, economic and environmental), in terms of the potential costs, benefits and risks
Supplier capacity and capability
How well the option:
¨ matches the ability of potential suppliers to deliver the required services
¨ appeals to the supply side Potential affordability How well the option:
¨ can be financed from available funds
¨ aligns with sourcing constraints Potential achievability How well the option:
¨ is likely to be delivered given an organisation’s ability to respond to the changes required
¨ matches the level of available skills required for successful delivery