Sensitivity analyses are conducted to test the impact of changes in key assumptions used in the financial models on the quantitative value for money proposition and/or the affordability of the project. The sensitivity analysis holds all variables constant except one, to determine how sensitive the estimate of the cost of the project is to changes in that particular variable. It is important for the project team to identify key cost drivers for sensitivity analyses, in order to understand the significance of changes to those variables.
Sensitivity analysis is performed on different variables and their selection depends on individual projects. The key variables that are generally covered for all projects include:
Sensitivity analysis practices pursued by Partnerships BC are explained in more detail in the following sections.