Investment appraisal is an essential tool since it leads to better decisions. It encourages managers to question and justify what they are doing and it sets the tone for thinking rationally about value for money.
The majority of literature relating to investment appraisal provides instruction for large capital schemes, which are generally funded from centrally controlled resources, known as discretionary allocations, or through private finance. But this accounts for less than half of capital expenditure by value, and the remaining public funding, amounting to around £1.2 billion, is the subject of less debate.
The aim of this guide is to recommend a process to ensure capital investment decisions are appropriate, while ensuring the cost of the process does not outweigh the benefits.
