Innovation and Efficiency

20.09.17

Cost benefit analysis of government infrastructure ‘misused and poorly communicated’

The government must improve its system for valuing the costs and benefits of its infrastructure to improve the delivery of key projects, experts have today revealed.  

In a report called, ‘How to value infrastructure: Improving cost benefit analysis’, the Institute for Government (IfG) makes the case for the government to carry out better analysis of its infrastructure.

With a quarter of a trillion pounds worth of infrastructure investment expected over the next five years, the IfG research states that Whitehall cannot afford more expensive mistakes and unnecessary delays.

It adds that effective cost benefit analysis is the best way for the government to assess the economic value of projects, but often this process is misused, inconsistently applied, and poorly communicated.

The IfG also argues that cost benefit analysis can improve decision-making, and when used properly shouldn’t be abandoned.

The think tank made a number of key recommendations for government departments to take on board, including to publish clearer guidance for analysts, based on better data and more consistent assessment.

It also states that ministers needed to be more transparent about the way difficult infrastructure decisions were made.

Nick Davies, research manager at the IfG and report author, said: “Picking the right infrastructure projects can help boost productivity and economic growth.

“Cost benefit analysis should be a crucial tool for ministers making these decisions but too often it is misused, inconsistently applied and poorly communicated.

“Government must get much better at learning from the successes and failures of previous projects. Equally, ministers should be far more honest with the public about the limits of modelling and the real reasons behind their decisions. Cost benefit analysis is a useful tool but it will only ever be as good as the people using it.” 

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