Status of the issuing of a cost effectiveness analysis guidance document

QUESTION

To ask the Minister for Public Expenditure and Reform the status of the issuing of a cost effectiveness analysis guidance document; when the document will be issued; and if he will make a statement on the matter.

REPLY

As part of the ongoing reform of Ireland’s capital management systems, the Department of Public Expenditure and Reform is updating the Public Spending Code.  The purpose of this update is to strengthen the existing guidance to better align with the realities of project delivery and with a particular focus on improved appraisal, cost estimation and management.  The Office of Government Procurement is conducting a review of construction procurement which will align with the updated Public Spending Code.

The updated Public Spending Code will include the following reforms:

• Strengthened and harmonised capital appraisal guidance;
• Greater clarity on governance  and roles and responsibilities; 
• New mechanisms to improve the accuracy of cost estimates;
• Improved project life cycle to better reflect the realities of project delivery; and
• Increased transparency through publication of business cases and evaluation reports. 

The Public Spending Code requirements will still include the need for a financial analysis to assess affordability and an economic appraisal to assess the economic and social value of the project for public investment projects.  The Public Spending Code recommends the use of cost benefit analysis or CBA as the economic appraisal methodology for major projects but where CBA is less useful, in sectors such as housing or culture, cost effectiveness analysis or multi-criteria analysis may be more appropriate.

 

The Public Spending Code requires Departments to draw up their own sector-specific appraisal guidance as appropriate.  These are developed by the Department with lead responsibility for the sector and set out additional requirements and parameters specific to the sector, while remaining in the line with the Public Spending Code. The Department of Public Expenditure and Reform engages with Departments to ensure that the sector-specific guidance complies with principles and guidance set out in the Public Spending Code.

The revised central elements of the Public Spending Code relating to the appraisal and management of public capital projects will be published this autumn.  Further technical guidance building upon these central elements will follow later in 2019 and in 2020.