2.25 As part of the process of assessing the preferred option, sensitivity analysis should always be undertaken. Sensitivity analysis is the calculation of how changes in the underlying assumptions in the economic appraisal or risk analysis would affect the results and hence the choice of the preferred option. The procuring entity should perform sensitivity tests on the risks which have been assessed as having relatively large values and those which are subject to the greatest uncertainty (e.g. due to lack of historical information).
2.26 An effective way to present the results of sensitivity analysis is to calculate the switching value or cross over point. This is the amount by which the variable under investigation would have to change in order to affect the ranking of the options. A view should then be taken about the likelihood of the factor turning out worse than the switching value. Sensitivity tests and switching values are discussed in Appendix 2.