A3.21 Non-monetary factors are generally important in public sector appraisals therefore weighted scores can have a crucial influence upon option selection. It is vital that they are compiled and interpreted carefully, and that the reasoning behind the figures is clearly presented in appraisal reports.
A3.22 The results will consist of a set of weighted scores, including one for each option. These should act as indices for comparing the options' overall performance on non-monetary factors, indicating not only how the options rank but also how great the differences between them are. Thus they should serve a similar purpose in respect to non-monetary factors as NPVs do in respect to monetary factors. For example, if Options E, F and G have weighted scores of 2000, 1000, and 950 respectively, this indicates that Option E is significantly better (about twice as good) as either Options F or G, while Option F is slightly better than Option G. This is more informative than the use of an ordinal scale, which can only indicate the rank order of E, F and G.
A3.23 Weighted scores can be directly compared with NPVs, to help assess trade-offs between costs and non-monetary performance. This is illustrated by the following example.
1. | 2. | 3. | 4. | 5. | 6. |
P | 3.0 | 790 | 3,797 |
|
|
Q | 4.5 | 1,010 |
|
|
|
R | 4.0 | 1,250 | 3,200 | 460 | 2,174 |
S | 5.0 | 1,480 | 3,378 | 690 | 2,899 |
A3.24 Columns 2 & 3 show the Net Present Costs (NPCs) and Weighted Scores of Options P, Q, R and S. The information in these columns is sufficient to indicate that Option R dominates Option Q. In other words, Option Q is both more costly and less beneficial than Option R, and, other things being equal, can be dismissed from further consideration.
A3.25 The figures in columns 4 to 6 help to compare the cost-effectiveness of Options P, R and S. Column 4 implies that Option R is the most cost-effective in terms of total cost per unit of weighted score. Columns 5 & 6 help to indicate the differences between Options R and S and the least cost option, Option P. The figures suggest that Options R and S offers significant extra benefits than P, and that Option R does so at the lowest marginal cost.
A3.26 Such calculations need to be handled with care. It is important to bear in mind that weights and scores are based on judgements. They are not precise measurements against an interval scale, such as the measurement of temperature against the Fahrenheit or centigrade scales. The importance of explaining the weights and scores fully, and interpreting the results carefully, can not be over-stressed.
A3.27 The results of a weighted scoring exercise are specific to individual cases, and are not readily transferable to others. However, the criteria relevant to one project are likely to be relevant to other projects of a similar type. The weights given to these criteria may not be the same, but the principles for deciding the weights should show some consistency across similar projects. There should also be some consistency in the principles used for scoring options within similar categories of project.