Summarise the key findings of the economic appraisal:
◼ Identify all relevant costs (quantified or estimated) - capital, operating, maintenance; provision for contingencies. The stream of costs should cover the full project period which will be based on the economic life of the project or program. Costs need to be in sufficient detail to have their accuracy verified. The level of certainty for the cost estimates and the basis for estimation should be described. The basis for annual cost escalation indices should be provided.
◼ Identify the benefits - may include avoided costs, savings, revenues, benefits to consumers not reflected in revenue flows, benefits to the broader community.
◼ Identify qualitative factors - may include environmental considerations, industrial relations, social or regional impacts, safety, public relations, resource availability.
• Assess net benefits - costs and benefits should be valued in real terms: that is they should be expressed in constant dollars and increases in prices due to the general rate of inflation should not be included in the values placed on future benefits and costs.
The stream of costs and benefits (expressed in real terms) should be discounted by a real discount rate and sensitivity tested using discount rates pursuant to the Economic Appraisal Guidelines.
Using the discounted stream of costs and benefits, the following decision measures should be calculated:
o Net present value
o Net present value per dollar of capital outlay
o Benefit-cost ratio
o Internal rate of return
◼ Sensitivity testing - analyse the sensitivity of the options under different scenarios and different discount rates.
◼ Explicit reference to data sources and assumptions - document all sources of data and assumptions.