Appraisal in practice: making the Green Book work harder
Green Book appraisal is often treated as a compliance exercise. Treated as an analytical discipline, it can materially improve the quality of decisions.
HM Treasury's Green Book provides a well-established framework for the appraisal of policies, programmes and projects. In practice, however, appraisal is frequently approached as a documentation requirement — a hurdle to clear rather than a method to apply.
The difference between compliance and analysis shows up most clearly in the treatment of the counterfactual. A carefully specified counterfactual is the single most important determinant of a credible appraisal, yet it is often the least scrutinised element of a business case.
Equally important is the honest treatment of uncertainty. Sensitivity analysis that varies assumptions mechanically adds little; sensitivity analysis that interrogates the assumptions most likely to change the decision adds a great deal. The aim is to identify the small number of judgements on which the case actually rests.
Approached in this way, appraisal becomes a tool for improving decisions rather than justifying them. The discipline of stating assumptions, testing them, and reporting uncertainty is precisely what gives the resulting evidence its authority.
This insight reflects the analytical practice of AO Group and Services. It is provided for general information and does not constitute advice on any specific matter.