3.8  Sensitivity Analysis

Sensitivity analysis should be used to test the robustness of the options.  If small changes affect the option rankings then care must be taken when proceeding with the investment.

Costs and benefits values should not be changed on an arbitrary basis.  Consideration must be given to what might change and the reasons for this.  If relatively small changes to an assumption have a major impact on the NPV then these assumptions must be more thoroughly understood and plans made to manage the situation should that option be chosen as the preferred option.