Scenario analysis

Scenario analysis is a technique used to consider the effect on the whole project of changes in a combination of value for money drivers. Scenario analysis overcomes some of the limitations of sensitivity analysis by specifying ranges of outcomes for each variable and looking at likely combinations. The result of scenario analysis is a range of values in which the final value for money outcome may lie. The results of scenario analysis can be usefully represented in the form of a bar chart comparison. Figure 8 demonstrates how a public private partnership project delivery option is likely to deliver value for money when compared with the range of possible outcomes from the traditional option (i.e., the public sector comparator ).

Figure 8 – Scenario analysis: value for money