You are evaluating a capital investment. You may need to complete an economic assessment as part of this evaluation.
DTF provides guidelines for how to develop and implement investment proposals in Victoria, called the ‘investment lifecycle’. The process and guidance are regularly reviewed and updated. Staff are advised to check the DTF website and make contact with their finance team prior to commencing the process.
Generally, however, the evaluation of an investment happens in Stage 5 of the cycle, ‘Realise’. You may be required to undertake an economic assessment as part of your evaluation.
If your project is considered ‘High Value High Risk’, you are required to undertake a ‘Benefits Evaluation’ as part of the Gateway Review Gate 5. This review determines whether the benefits set out in the business case are accurate.
How should I undertake the economic assessment?
If your evaluation requires an economic assessment, guidance on undertaking economic assessment ( docx - 262.9 KB) has been developed for staff to assist when performing, commissioning and evaluating economic assessments. Further guidance on specific processes, variables and methods is also available.
Cost-benefit analysis is recognised as leading practice economic assessment and is the recommended approach across the Victorian Government. In practice it may not be possible to undertake a cost-benefit analysis for all proposals and other methods may be used on an exceptions basis.
All economic assessments should be guided by the principle of proportionality, such that the investment in undertaking an economic assessment should be proportional to the scale and risk of the particular issue, initiative or investment.
Page last updated: 17 July 2017