Every year, billions of pounds are spent on public expenditure programmes in Northern Ireland. It is vital that this money is put to use in a way that delivers the maximum benefit to the people of Northern Ireland. It is also important that all spending is accountable to the Northern Ireland Executive and Assembly.
The Northern Ireland Guide to Expenditure Appraisal and Evaluation (NIGEAE) is designed to help achieve these ends. It is the primary guide for Northern Ireland Departments on the appraisal, evaluation, approval and management of policies, programmes and projects - the essential elements in the cycle of expenditure planning and service delivery.
NIGEAE's broad approach to expenditure assessment rests on broadly similar principles to those applicable in England, Scotland and Wales. However, NIGEAE is more focussed upon Northern Ireland. Its guidance is tailored specifically to the needs of Northern Ireland Departments, taking account of local policies and institutional arrangements. It is intended to help assess what is best for the people of Northern Ireland and accordingly it focuses on examining the pros and cons of spending proposals from a Northern Ireland perspective. However, it allows flexibility to consider significant impacts upon other territories such as Great Britain, the Republic of Ireland, and the rest of the EU, where they are considered relevant.
The principles in this guide must be applied to all proposals that involve spending or saving public money, including EU funds, and to all proposed changes in the use of public resources. All such proposals should be supported by evidence of suitable appraisal, approval, management and evaluation. There are no exceptions to this general requirement. For example, the principles apply to all expenditures regardless of whether they are large or small, capital or recurrent, and above or below delegation limits.
However, it is always vital to apply proportionate effort. The effort required to assess a small expenditure is very much less than that needed to justify a major programme, a new policy or a large project. It is also important that the appraisal techniques used are appropriate to the case in hand. The concepts of proportionate and appropriate effort are explained in section 1.3.
NIGEAE replaces the Northern Ireland Practical Guide to the Green Book which was published in 2003. The underlying rationale is to bring the 2003 guidance up to date and move to fuller reliance upon on-line guidance in order to facilitate more frequent updating in the future. The basic steps of appraisal and evaluation remain fundamentally unchanged, but there are a number of developments that are worth noting:
- NIGEAE encourages adoption of a more explicit Northern Ireland perspective in appraisals and evaluations, in keeping with Devolution. However, the assessment of wider impacts upon the UK and beyond is still encouraged, where they are considered relevant and significant (see 1.1 and 2.5).
- For procurement projects, more emphasis is placed upon the importance of assessing the alternative forms of both conventional and PPP procurement that are now available, before selecting the appropriate procurement route (see 5.4.3-5.4.5).
- NIGEAE introduces a requirement to include a detailed costing of a conventional procurement option (CPO) at key points during a PPP procurement, including just prior to appointment of a preferred bidder. This is to provide greater confidence that the best VFM route is being selected (see 5.4.11-5.4.12).
- DFP approval is now required at Strategic Outline Case (SOC) stage for all major projects and high profile cases. This should help to ensure that fundamental issues are identified and addressed early in a project's life, resulting in a smoother approval process overall (see 8.5).
- The tolerance limits on cost within the standard conditions of DFP approval have been revised to refer to total revenue costs instead of net present costs. DFP Supply must now be notified "if it becomes apparent that either the total capital expenditure or total revenue expenditure indicated in the approved business case will be exceeded by more than 10%" (see 9.3.1).
- Programmes and projects should now generally be managed in accordance with Central Procurement Directorate's new Programme and Project Management (PPM) guidance, introduced in June 2009 (see Successful Delivery (NI)).
- From now on, DFP will request to see post project evaluations (PPEs) only for larger projects and those projects which DFP believes to have a substantial read across to other projects (see 11.3).
It is worth noting that the appraisal and evaluation guidance provided in NIGEAE is general guidance. It may need to be supplemented by more specific guidance to suit particular areas of expenditure and different types of spending proposals. For example, the precise approach needed to assess inward investment or tourism may differ from that required to analyse roads or housing; and each of these areas may require Departments to maintain separate guidance for them. However, such guidance should always accord with the general principles of NIGEAE and should be agreed with DFP prior to use.
NIGEAE sets out the general principles to be applied by approving authorities when approving capital projects and other expenditures. It should be noted that approvals in principle should not be granted in any case prior to the completion of a suitable business case, including an appropriate economic appraisal. Only when needs, objectives, options, costs, benefits, risks, funding, affordability and other relevant factors have been thoroughly investigated according to the relevant appraisal methodology can approving authorities be assured that a particular proposal is likely to represent value for money and satisfy accountability requirements.
It is a general condition of DFP approval that the relevant Supply Division must be notified if at any time costs or other assumptions vary by more than 10%, or if implementation is delayed by more than 24 months, or if there are any significant changes in scope by comparison to the details given in the business case upon which DFP approval was based. Section 9.3 elaborates on the standard conditions of approval.
Where the term "Departments" is used in this guidance, it should be understood to cover all the public bodies for which Departments have responsibility. Departments are responsible for ensuring that appropriate procedures exist in relation to all the grants, expenditures and resources for which they are accountable, including those of their Agencies, Non-Departmental Public Bodies (NDPBs) and other relevant bodies.
Suggestions to improve the guidance are welcome, and should be addressed in the first instance to DFP's Strategic Policy Division at Rathgael House.
Department of Finance and Personnel
Strategic Policy Division