Economic Appraisal Guidance
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NI Practical Guide to the Green Book

CHECKLIST OF COST AND BENEFITS

  Economic
Appraisal		 Commercial
Appraisal

1. Costs

a. Capital Costs
  Land purchases should be included should be included
Land already owned should be included should be included
Fixed Capital purchases should be included should not be included
Fixed Capital already owned should be included should not be included
Depreciation on Fixed
capital purchases		 should not be included should be included
Depreciation on Fixed
capital already owned		 should not be included should be included
Interest payments,
capital charges		 should not be included should be included
Change in Working
capital requirement		 should be included should be included
Capital subsidies/grants
from UK		 should be included1 should be included
   

b. Current Costs
Cost of inputs & outputs
(excluding capital)		 should be included should be included
Insurance costs should be included2 should be included
Corporation Tax should not be included3 should be included
VAT should not be included3 should be included
Import Duties should not be included3 should be included
Redundancy payments
By UK public bodies		 should not be included should be included
Redundancy payments
By UK firms		 should not be included should be included
Revenue grants from UK should be included1 should be included
Repatriated profits from UK should be included should not be included
   

c. Wider Quantifiable Costs
On individuals and firms
(except transfer payments)		 should be included should not be included
On other public sector bodies should be included should not be included
Increase in transfer payments
to individuals and firms		 should not be included should not be included
   

d. Unquantifiables
Distributional Impact should be included should not be included
Image & social conscience
of firm/organisation		 should be included should be included
Working environment should be included should be included
Other effects such as
pollution, health, etc		 should be included should not be included
 

2. Benefits
   

a. Capital Benefits
Residual value (RV) of land should be included should be included
RV of fixed capital should be included should be included
RV of working capital should be included should be included
Capital subsidies/grants
from abroad		 should be included should be included
   

b. Direct Benefits
Sales revenue should be included should be included
VAT should not be included3 should be included
Cost savings should be included should be included
Redundancy Payments
From abroad		 should be included should be included
Revenue grants from
abroad		 should be included should be included
   

c. Wider quantifiable benefits
On individuals and firms
(except transfer payments)		 should be included should not be included
On other public sector
bodies 		should be included should not be included
Decrease in transfer
Payments		 should not be included should not be included
   

c. Unquantifiables
Distributional impact should be included should not be included
Image should be included should be included
Working environment should be included should be included
Other benefits such as
reduced pollution,
Improved health, etc		 should be included should not be included


Notes:
1 Strictly speaking, it is the use of the resources funded by the grant/subsidy that represent an economic cost, rather than the grant/subsidy itself.
2 Government has tended to bear risk centrally rather than purchase insurance. However, some public bodies do carry insurance.
3 In practice, adjustment of market prices for taxes is only undertaken in economic appraisal where it may make a material difference to the decision e.g. when comparing options that attract different VAT rates, or when comparing public and private options. See pages 35-36 above for details.