- C1: Appraisal and authorisation
- C2: Authorisation limits and process
- C3: Project proposal form and request for authority form
- C4: Revised request for authority
- C5: Post project appraisal and evaluation
- C6: Type of post project appraisal
- C7: Role of the committees
- C7.1: VCEG
- C7.2: Infrastructure Coordination Group
- C7.3: Infrastructure Strategy Group
- C7.4: Council
- C7.5: Project Coordination Group
- C8: Procurement
- C9: University and College strategic goals
- C10: Self funded schemes
- C11: Key deliverables
- C12: Implementation costs and income
- C13: Operational costs and income
- C14: Inflation
- C15: Discount rates and expected rates of return
- C16: Reviewing alternatives
- C17: Appraisal narrative
- C18: Risk mitigation and avoidance
- C19: Project team competencies
C14: Inflation
Implementation costs and income may occur over several years, and operational costs and income may very well be recurring in nature.
Operational costs and income may occur over the maximum 25 year period in the Option Appraisal form. These operational costs and income should be calculated at today’s prices, which are prices that are not inflated. The discount rates used are on the assumption that no inflation is included within the cash flow analyses.
The only time where some inflation may be included is where the different cost and income cash flows will be subject to different inflation rates. For example construction cost inflation may be materially different to those of pay. “Materially” in this context is defined as where not to allow for this inflation differential may lead to an incorrect decision to approve a project that should otherwise have been rejected, or conversely a project that should have been approved being rejected. If such a situation regarding inflation arises then you may either:
- Set a standard rate of inflation, probably the current RPI, and allow for inflation only to the extent that it differs from this, and then only by the extent it differs from this. The standard approved discount rates should be used in this situation; or
- Apply actual inflation to all of the various components of the project cash flows. This may mean that several different rates of inflation are required. These different rates should be noted as assumptions in the appraisal narrative. If this option is used then the discount rates used in the Option Appraisal form should be increased by the current RPI.
