The Green Book 2022 HM Treasury- Quick and simplified "how-to guide." - Civil Bites

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Estimate, Estimation, Cost Management, Civil Engineering, Whole Life Cycle Costing, Infrastructure

The Green Book 2022 HM Treasury- Quick and simplified “how-to guide.”

The Green Book is a set of guidelines issued by HM Treasury on how to appraise policies, programmes, and projects. Government departments and agencies use it to assess the costs and benefits of different options before making a decision.

The Green Book is divided into four main parts:

  1. Introduction
  2. Shortlist Appraisal
  3. Full Appraisal
  4. Monitoring and Evaluation

This article will focus on the first two parts of the Green Book, as they are most relevant to civil engineers and cost planners.

Shortlist Appraisal

The shortlist appraisal is the first stage of the appraisal process. It is used to assess the feasibility of different options and to identify the most promising ones for further consideration.

The shortlist appraisal should consider the following factors:

  • The costs and benefits of each option: This includes both the direct costs (such as the cost of construction) and the indirect costs (such as the cost of lost productivity). The benefits should also be considered, both tangible benefits (such as increased capacity) and intangible benefits (such as improved environmental quality).
  • The risks associated with each option: This includes both financial risks (such as the risk of cost overruns) and non-financial risks (such as the risk of environmental damage).
  • The timescales for each option include the time it will take to construct the project and the time it will take to achieve the benefits.
  • The political acceptability of each option includes the extent to which the option is likely to be supported by the public and decision-makers.

Full Appraisal

The full appraisal is the second stage of the appraisal process. It is used to assess the costs and benefits of the most promising options in more detail.

The full appraisal should consider the following factors:

  • Each option’s costs include the same costs considered in the shortlist appraisal but in more detail. The full appraisal should also consider the costs of maintenance and operation.
  • The benefits of each option include the same benefits considered in the shortlist appraisal but in more detail. The full appraisal should also consider the benefits that are difficult to quantify, such as the value of improved environmental quality.
  • The risks associated with each option include the same risks considered in the shortlist appraisal but in more detail. The full appraisal should also consider the likelihood of each risk occurring.
  • The timescales for each option include the same timescales considered in the shortlist appraisal but in more detail. The full appraisal should also consider the sensitivity of the timescales to changes in other factors.
  • The political acceptability of each option includes the same political acceptability that was considered in the shortlist appraisal but in more detail. The full appraisal should also consider the extent to which stakeholders likely support the option.

Cost Planning

Cost planning is an essential part of the appraisal process. It involves estimating the costs of different options and identifying the key cost drivers.

The cost planning process should start at the early stages of the appraisal process. This will help to ensure that the most cost-effective options are selected.

The cost-planning process should consider the following factors:

  • Construction costs: This includes the cost of materials, labour, and equipment.
  • The costs of operation and maintenance: This includes the cost of fuel, repairs, and staffing.
  • Financing costs: This consists of interest payments and repayment of the loan.
  • The costs of risks: This includes the cost of insurance and dealing with unexpected events.

The cost-planning process should also use the following tools and techniques:

  • Cost estimating: This involves developing estimates of the costs of the different options.
  • Cost budgeting involves setting a project budget, including a contingency fund for unexpected events.
  • Cost control consists of monitoring the project’s costs and taking corrective action if necessary.

Conclusion

The Green Book is a valuable resource for civil engineers and cost planners. It guides how to appraise policies, programmes, and projects systematically and transparently.

The Green Book is not a rulebook. It is a set of guidelines that can be adapted to the specific needs of each project. However, following the guidance in the Green Book will help to ensure that the most cost-effective and beneficial options are selected.

In addition to the factors mentioned above, the Green Book also emphasises the importance of considering the following elements in the appraisal process:

  • The distribution of costs and benefits: The Green Book stresses the importance of considering how the costs and benefits of a project are distributed among different stakeholders. This is because a project that benefits society may only benefit some stakeholders.
  • The sustainability of the project: The Green Book also emphasises the importance of considering the sustainability of a project. This includes considering the environmental impact of the project, as well as the social and economic effects.

The Green Book is a comprehensive and valuable resource for civil engineers and cost planners. By following the guidance in the Green Book, practitioners can help ensure the decision-making process is framed and defined. I hope this article provides a quick overview of the Green Book 2022 HM Treasury. If you have any questions, please feel free to comment below.

One Comment

    February 8, 2024 REPLY

    I have been struggling with this issue for a while and your post has provided me with much-needed guidance and clarity Thank you so much

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