1.4.1 Appraisal may take various forms. However, irrespective of the precise form of an appraisal, a number of basic elements are common to most of them. The following ten key steps should generally be addressed:
• explain the strategic context
• establish the need for expenditure
• define the objectives and constraints
• identify and describe the options
• identify and quantify the monetary costs and benefits of each option
• assess risks and adjust for optimism bias
• weigh up non-monetary costs and
• calculate Net Present Values and appraise uncertainties, including appropriate sensitivity analysis
• record proposed arrangements for financing, management, marketing, procurement, monitoring and post project evaluation
• assess the balance of advantage between the options and present the results and conclusions
1.4.2 Where funding of the private or voluntary sectors is in view, then, in addition to the ten key steps, assessment of the following three criteria is also a basic appraisal requirement:
• additionality
• viability
• cost-effectiveness
1.4.3 These basic steps are summarised in a fuller checklist on pages 5 & 6. Section 2 is devoted to explaining the ten key steps in more detail.