Table 5 CBA components that have relatively good agreement, poor agreement and flexibility in application
CBA component | Areas of agreement | Areas of disagreement | Areas of flexibility |
|---|---|---|---|
When to conduct a CBA | Commensurate with the scale of investment Required for investments over A$ 10 million | CBA not recommended for primary analysis by PBAC | Type of analysis that is appropriate for investments less than A$ 10 million |
Perspective and referent group | Societal perspective for CBA | The referent group or standing varies from communities within LGAs, the state jurisdiction and whole of Australia Health perspective recommended by PBAC using CUA | |
Comparator/base case | Well-defined status quo. Avoidance of “straw man” comparator | Terminology (base case versus comparator) | |
Options for appraisal | A range of realistic options should be included | The number of options included | The nature of options included |
Time horizon | Principle that the time horizon should be the economic life of the project Longer time horizons are associated with increased uncertainty | Appropriate time horizons for various interventions | |
Social discount rate | Theoretical basis for social discount rate The rate to be used in primary and sensitivity analyses | ||
Costs and benefits | Second-round impacts excluded in primary analyses | The appropriate value for the VSL and VSLY | Technique for estimating non-market impacts Inclusion of productivity impacts |
Decision rules | NPV and BCR should be reported | The preferred outcome measure (NPV or BCR) when these measures give varied results | |
Sensitivity analyses | Extensive uncertainty analysis should be undertaken to test the impact of key assumptions and variables | Terminology (uncertainty analysis, risk analysis, sensitivity analysis) | Type of analyses: one-way, scenario, best/worst-case, Monte-Carlo simulations |
Distributional impacts and other considerations | Distributional impacts should not be incorporated into technical results Distributional impacts should be considered by decision-makers | Method of undertaking distributional analysis | |
Reporting | All critical assumptions and input parameters should be documented with supporting evidence | Reporting standardized but varied across guidelines |