Ex-Ante Policy Appraisal

Appraisal is forward-looking: it assesses the likely costs, benefits and risks of options before a decision is made, to choose the best course of action. Evaluation is backward-looking: it assesses an intervention after it has been implemented, to judge whether it worked and represented good value. The two are complementary parts of the policy cycle — a good appraisal specifies what later evaluation should measure, and evaluation findings feed back to improve future appraisals. The Green Book and its companion Magenta Book cover appraisal and evaluation respectively.

Generating a broad long-list first, including the business-as-usual baseline, ensures that genuinely different ways of meeting the objective are considered before the field is narrowed, countering the tendency to fix on a preferred solution too early. The structured sift to a short-list, with documented reasons, makes the narrowing transparent and challengeable. Appraising only one or two options, or a preferred option against weak alternatives, undermines the whole point of appraisal, which is to find the option that genuinely offers the best public value.

Optimism bias is the well-documented tendency for project costs and timescales to be underestimated and benefits overestimated at the appraisal stage. Guidance such as the Green Book requires explicit adjustments for optimism bias — uplifting cost estimates based on evidence from past projects — and the use of sensitivity analysis and reference-class forecasting to stress-test estimates. The aim is to produce realistic rather than hopeful figures, so that decisions are not based on systematically flattering projections of the preferred option.