The Economic Case

Which case is concerned with demonstrating that the preferred option delivers best public value through formal options appraisal?

• A The Strategic Case
• B The Economic Case ✓
• C The Management Case
• D The Commercial Case

Answer: The Economic Case appraises options to identify the one that optimises public value (value for money), balancing costs, benefits and risks.

In the Economic Case, what is the purpose of moving from a 'long list' to a 'short list' of options?

• A To agree the final contract terms
• B To set the project's governance structure
• C To confirm the available capital budget
• D To reduce a wide range of possibilities to a manageable set for detailed appraisal ✓

Answer: The long list captures the full range of possibilities, which is then filtered down to a short list of viable options for detailed cost-benefit appraisal.

What does 'optimism bias' refer to in the Economic Case?

• A The preference for the cheapest available option
• B The discount rate used to convert future values to present values
• C The natural tendency to be over-optimistic about a project's costs, benefits and timescales ✓
• D A method of allocating risk to the private sector

Answer: Optimism bias is the demonstrated tendency for appraisers to be over-optimistic about project parameters; adjustments are applied to counter it.

In the Five Case Model, what is the 'business as usual' or 'do nothing' option used for?

• A As a baseline benchmark against which other options are compared ✓
• B As the option that maximises optimism bias
• C As the preferred way forward in every business case
• D As the only option requiring a cost-benefit analysis

Answer: The do-nothing or business-as-usual option provides a baseline reference point against which the value of alternative options can be measured.

Which analytical technique is commonly used in the Economic Case to assess the relative strengths and weaknesses of options?

• A RACI analysis
• B PERT charting
• C SWOT analysis ✓
• D Earned value analysis

Answer: SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) is frequently applied to evaluate shortlisted options in the Economic Case.

What is the main aim of cost-benefit analysis (CBA) within the Economic Case?

• A To compare the monetised and non-monetised costs and benefits of each option ✓
• B To set the contractor's payment schedule
• C To define the project's spending objectives
• D To allocate roles within the project team

Answer: Cost-benefit analysis weighs the full costs against the full benefits, including non-monetary factors, to determine which option offers best value.