Guidance

Costings and planning workbook tables A1 to A6 user guidance

Updated 2 August 2022

Introduction

This guidance note is intended to support Levelling Up Fund round 2 applicants in completing the costings and planning workbook(s) as part of their application. Specifically, this note covers the worksheets Table A1 Methodology Note to Table A6 VfM.

Please note that this is not an exhaustive list and in general applicants should adjust the workbook for their needs where necessary. If this guidance note does not sufficiently answer an applicant’s questions, they are advised to send an email to LUFTeam@levellingup.gov.uk who will respond in due course.

Table A1 Methodology Note

In this worksheet, applicants are asked to provide the base-year of the appraisal period, the length of the appraisal period, discount rates and detail on the inflation rates that have been used in the appraisal.

• A1.1 is auto populated based on the information provided in the Workbook Index Page. You are not required to complete this.
• A1.2 asks applicants to provide the base year of the appraisal, this should be consistent with the relevant departmental appraisal guidance but, as described in the question, it should be no later than 2022/23 – the first year that costs and benefits are expected to be incurred. The answer has been auto populated to 2022/23, but applicants are free to update this and use an earlier base year should they wish. For example, if applicants use a base-year of 2010/11 in their analysis, they should adjust this cell accordingly and the calculation tables in the following worksheets will automatically update. Applicants should keep a consistent appraisal period across the costing and planning workbook and all other documents submitted as part of their bids.
• A1.3 asks applicants to provide the length of the appraisal period^{[footnote 1]} of the analysis. An appraisal period of 10 years is suitable for most interventions. Refurbishments of existing buildings should be considered over 30 years, new buildings and infrastructure should be considered over 60 years. More guidance is provided in the Green Book) on this. The answer has been auto populated to 10 years; applicants are encouraged to amend this figure, so it is relevant for the particular suite of interventions they are proposing. For transport interventions the appraisal period should be 60 years as standard.
• A1.4 asks applicants for the discount rates used in their economic analysis. The standard and health discount rate are included here. No further action is needed from the applicant at this stage. Discount rates are covered in the Green Book).
• A1.5 is divided into two parts. Applicants should provide information regarding the source of their inflation inputs, if these deviate from the Green Book) guidance it should be explained why this is the case. In the second part of the question, applicants should provide their inflation assumption inputs. These will be used to adjust costs and benefits from nominal to real values in later worksheets.

Table A2 Economic Benefits

In this worksheet, applicants should provide information of the benefits they expect the proposal to deliver.

• A2.1 asks applicants to set out the benefits that they expect LUF to deliver, whether the benefits should be included in the ‘initial’ or ‘adjusted’ BCR and for information regarding the additionality of the benefit. Only impacts that are based on Green Book and Departmental guidance should feature in the ‘initial’ BCR calculation. Applicants are also asked to choose a “Type of discount rate” for the benefits to be discounted by, the standard discount rate or the health discount rate. The choice of discount rate used for each benefit should be guided by the Green Book. Applicants should clearly describe the benefit category here and provide information that would be useful for assessors. This should include a clear and detailed description of what the benefit captures, how it was calculated, include references to any guidance and evidence as well as any key assumptions.
• A2.2 asks applicants to provide the annual monetised value of the benefits of the project and whether these are in nominal or real prices. The BCR Type, the Benefit Category and the project is auto populated based on the answers in A2.1. Where it is not possible, or appropriate, to provide the annualised monetised benefit applicants should capture the monetised benefit in the year they expect the benefit to be realised. However, if applicants have made use of an appraisal toolkit, such as the Department for Transport’s Active Mode Appraisal Toolkit (AMAT), that already calculates the benefits then these should be inputted into the first year of the appraisal. This will ensure no further discounting and deflating will be applied to those benefits.
• A2.3 asks applicants to provide the monetised benefits of the proposal. This is auto calculated based on the information provided in A2.2. However, if any amendments have been made or if there’s any additional information applicants believe would benefit their application then they should include this in the description box.

Table A3 Benefits Calc

This worksheet calculates the discounted, real-terms benefits based on the information provided by applicants in Table A2 Economic Benefits. Applicants do not need to complete any additional sections within this sheet.

Table A4 Economic Costs

In this worksheet, applicants should provide the capital costs of the Levelling Up Fund proposal incurred by the public and private sector and the associated optimism bias.

• A4.1 asks applicants to populate the table(s) with information on the capital costs of the Levelling Up fund proposal that would be incurred by central government (LUF Funding), other public sector authorities (Other Public Sector Funding) and finally, the private sector (Private Sector Funding).
• A4.2 asks applicants to provide any public sector or private sector resource costs that would be incurred in operating the proposed intervention where applicable. Note that if there are associated revenues from the intervention, these should be provided here as a negative resource cost.
• A4.3 asks applicants to provide the optimism bias that should be included on top of the capital costs. Further information regarding the appropriate level of optimism bias can be found in the Green Book supplementary guidance on optimism bias). Applicants should describe how they arrived at the level of optimism bias and why it is appropriate for this particular proposal. Should applicants wish to apply optimism bias to the resource costs or the benefits, this should be applied manually to the resource costs in A4.2, to the benefits in A2.2 or explained as sensitivity analysis in A6.3.
• A4.4 asks applicants to provide the economic and social costs of the proposal. This is auto calculated based on the information provided in worksheet Table A1 Methodology Note and answers A4.1 and A4.2. However, if any amendments have been made or if there’s any additional information applicants believe would benefit their application then they should include this in the description box.

Table A5 Costs Calc

This worksheet calculates the discounted, real-terms costs based on the information provided by applicants in Table A4 Economic Costs. Applicants do not need to complete any additional sections within this sheet.

Table A6 VfM

In this worksheet, applicants should provide information of the overall value for money of their Levelling Up fund proposal. This includes an assessment of the monetised benefits, non-monetised benefits and sensitivity analysis.

• A6.1 asks applicants to confirm the ‘initial’ and ‘adjusted’ BCR(s) of the proposal. This is auto calculated based on the information provided the worksheets Table A1 Methodology Note, Tables A2 Economic Costs and Table A4 Economic Benefits. However, if any amendments have been made or if there’s any additional information applicants believe would benefit their application.
• A6.2 asks applicants to provide any information of non-monetisable benefits as part of their application. This should include a description of the non-monetisable benefits, any supporting evidence and the likely scale and significance of the impacts.
• A6.3 asks applicants whether they have carried out any sensitivity analysis and what the conclusions of this analysis. This is important in determining how sensitive the value for money of the proposal is to changes in key assumptions.

Transport specific guidance

Where applicants have used transport models, they may want to adapt the sheet to best fit their results. This will likely mean not using some of the worksheets pre-existing formulas, if for example you are using the Transport users benefit appraisal (TUBA) software you would input your already discounted results into the appropriate cells (removing formulas beforehand).

As noted previously applicants are free to pick the base-year they think is most appropriate. Whilst it is true that normally the department would expect a base year of 2010 (per TAG) in this instance applicants will not be disadvantaged by picking another. This is due to the fact that bids are already going to be assessed and compared across multiple themes and therefore multiple departments (DfT and DLUHC do not share the same standard base year). It is important to note that a different base year should not theoretically change a schemes BCR when comparing to appraisal results, if you find this is the case then you should override the worksheet and stick to a consistent set of figures across all bid documents. Differences in BCR’s may occur, for example, due to the fact the worksheet does not apply an indirect tax rate (like AMAT does).

When filling out package bids that have differing appraisal periods or optimism bias, applicants should use workarounds detailed in this sheet or adapt the sheet to fit their bid(s). An example of a workaround could be for package bids with different appraisal periods to use the maximum (60 years) in the sheet but simply cut of benefits at 10 or 20 (whatever the appraisal period for that specific type of scheme is) for each specific part of the package.

There is likely to be crossover in the information included in this worksheet and the appraisal summary table (AST), applicants should ensure all summary information needed in assessing the bids is included across the two sheets but can be proportionate in how they fill them out and should avoid duplication where possible. Applicants should pay particular attention to the M&E plan in the workbook as this is not covered in the AST.

Supplementary documents such as the Planning and Costing Worksheet or the AST will be used in support of the bid when assessing and will help the assessors access all the key information in a salient manor. Applicants will not be downgraded for elements of both sheets that it is not possible to fill out if the assessor is still able to access all the required information.

1. The appraisal period refers to the time horizon that all resultant costs and benefits can be reasonably claimed to be as a result of the intervention and typically differ depending on the type of intervention. ↩