Full report (pdf - 1148KB) - National Audit Office

Appraisal and sustainable development 35Annex TwoNAO Option Appraisal findings andrecommendationsIn May 2011, the National Audit Office published a review of option appraisal in centralgovernment. This was based on interviews with departmental Chief Economists, asurvey of departmental policy staff, and detailed analysis of impact assessments andbusiness cases. The review addressed the business case and impact assessmentprocesses for option appraisal. Its key findings and conclusions are brieflysummarised below.Key findingsEstablished systems for option appraisal seek to promote gooddecision-makingCentral guidance on cost-benefit analysis is thorough, and there are establishedsystems to make sure that policy, regulation and expenditure projects are appraised.Many departments supplemented central guidance with material relevant to theirsector. The quality of the appraisals varied demonstrating the need to sharpen therequirements for completing appraisals and tighten management of its application, tosecure full value from the process. Both processes provide for the depth of analysis tobe ‘proportionate’ to the significance of the decision. The challenge has been to define‘proportionate’ logically and in a well-informed way: the central guidance does notcover this issue well.Management of the appraisal processes by departmentsGood planning helps to integrate appraisals into the decision-making process. Manydepartments had no standard process across their organisation to manage thedevelopment of Impact Assessments, but those that had such a process produced, onaverage, stronger appraisals. Good planning draws on scheduling and helps assignsuitable appraisal resources and promotes a better programmatic overview.Quality assurance processes are well established across government but they do notguarantee appraisal quality. Departments have different assurance processes. Strongexternal challenge and transparency were motivators for staff to improve the quality ofappraisal. There was no management information on the initial quality of appraisals.Retrospective review of appraisals in one department had helped secure increasedquality over the years.Business cases and Impact Assessments, once produced, have not been used tomanage the delivery of benefits and manage costs against original expectations.There has been a lack of post-implementation reviews or evaluations.