Guidance

OVfM Investment appraisal criteria

Published 11 March 2025

Investment appraisal: OVfM’s key considerations

The Chief Secretary has confirmed the Office for Value for Money (OVfM) will scrutinise the value for money (VfM) of some investment proposals at the Spending Review including through HMT’s capital appraisal panels, and will prioritise proposals that drive savings in future years. To support departments, OVfM has set out questions it will be focused on when considering the VfM of proposals. There are questions relevant to all projects, and some specific to the nature of the project. OVfM will be supported by subject experts where relevant, for example by the Infrastructure and Projects Authority (IPA) on major projects, Department for Science, Innovation & Technology (DSIT) on digital, and UK Government Investments (UKGI) on financial transaction (FTs).

Questions for all investment proposals:

1. Is it clear what the proposal is designed to achieve? Is the proposal consistent with cross-government priorities?
2. Is the scope clear? How will success be assessed in-flight and on completion?
3. Are other programmes designed to achieve the same or similar, and are these complementary or duplicative?
4. Have lessons learnt about similar past or current programmes been incorporated here? Can the delivery solution replicate that of a previous successful programme?
5. Have costs and timelines been compared to similar proposals? Has this informed cost and delivery estimates?
6. Is a delivery team in place with access to the necessary expertise, e.g., the appropriate digital expertise?
7. Have the potential VfM benefits of private sector investment been explored?
8. Does the proposal have proportionate governance and approvals processes in place that can spot when delivery is off-track and implement solutions? Does the Senior Responsible Owner (SRO) have sufficient delegated authority, e.g., on salaries and procurement? Is there an appropriate commercial strategy and integrated assurance plan in place?
9. Are there options for how the proposal could be revised, if needed, to deliver within broader spending constraints, and are the impacts on benefits well understood? Can the programme be stopped early if judged to be failing?
10. [If in-flight] Have any historic delivery (e.g., time; budget; scope) variances been clearly explained and addressed?
11. [If in-flight] Has there been any evaluation of the programme? Have the results been reflected in future plans?

Additional questions for major projects:

1. Is there political consensus that the proposal is required, and does it have a  political champion or advocate?
2. Have independent assurers reviewed the proposal’s scope, costs, timelines, and delivery plans and agreed they are realistic? Is the proposed delivery solution known and has it been confirmed to be technically deliverable?
3. Does the sponsor team have the right skills and experience to scrutinise, jointly solve problems, and engage effectively with ministers to support delivery and ensure a smooth approval process?

Additional questions for maintenance investment:

1. How does the proposal fit into and help to deliver the department’s Strategic Asset Management Plan?

Additional questions for grants:

1. Are appropriate grant conditions and controls in place and are there enforceable sanctions for any breach?
2. If the grant is to be delivered by an ALB, is it being delivered in line with the grant management standard?
3. Could the grant be delivered as a financial transaction instead?

Additional questions for financial transactions (FTs):

1. Would the desired outcome occur absent state intervention? What level of additionality is expected to be achieved and how will this be measured?
2. Is there a clear delivery and monitoring plan? Is the right capability in place to manage the financial risk?
3. [If a subsidy] Does the FT address a market failure; is it proportionate and necessary; is it designed in a way that minimises distortions; and is it value for money?

Additional questions for invest to save initiatives:

1. Are savings cashable against an existing baseline, or are savings against a counterfactual pressure? Is the payback period for cashable savings clear and evidence based?
2. If savings and/or costs from the programme come through another department’s budget, has the other department agreed to the costs and/or confirmed the savings are a reasonable estimate?
3. What plans are in place to ensure any lessons learnt from the programme can be shared across the public sector?