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Three techniques to support option appraisal and evaluation

Briefing paper | March 2011

Given rising user expectations and growing demographic pressures at a time of severe fiscal constraint on local authorities, commissioners of care services are under increasing pressure to ensure the most cost-effective allocation of resources. Accordingly, this briefing paper, produced by the Institute of Public Care, provides an introduction to option appraisal – the process of setting objectives, generating options, and determining the option that makes best use of available resources, according to a variety of criteria.

To support effective option appraisal by commissioners and managers and avoid common weaknesses in the process, the paper examines three techniques – cost benefit analysis (CBA); social return on investment (SROI); and multi-criteria analysis (MCA) – each of which emphasises slightly different concepts of value, whether that be purely monetary or allowing for broader interpretation of ‘social value’, for example.

The paper examines the core principles of each technique, the situations in which it is most applicable, how it works, the resources – time, money and expertise – it requires to enact, and the basic steps to follow in putting it into action. Examples are provided of each approach in practice in UK public care projects, and each section concludes with a summary of the strengths and weaknesses of the technique, both in absolute terms and relative to the other processes surveyed. Finally, links to further reading are provided.