Investment Appraisal
INVESTMENT APPRAISAL
Introduction
The government undertakes a variety of activities. They are responsible for setting macroeconomic policy; they seek to promote equity by aiding the poor and the disadvantaged and they provide a variety of services, such as education, health Care, defense, infrastructure, police and postal services.
Many of these activities involve large investments. Recent developments such as expanding the N3 Network infrastructure in preparation for the GP – Led health care commissioning across Britain have raised the issue of which of the investment proposal by the various service providers will be adopted and which assets should be owned by the public sector, whether assets have different values in the public and private sectors and how to price assets that are transferred between these two sectors. The crux of each of these questions is whether investment appraisal in the public sector should be different from the private sector. In this report I will be looking at investment appraisal within the UK health service organization (NHS)
Investment Appraisal is a critical tool in making key and strategic decision. By adopting it as a strategy, the NHS is more likely to achieve its objectives efficiently and effectively. It encourages the central government and managers alike to question and justify what they are doing and it sets the tone for thinking rationally about value for money. The majority of literature relating to investment appraisal provides instruction for large capital projects schemes, which are generally funded from centrally controlled resources, known as discretionary allocations or commissioning budget (that is at the discretion of the NHS Executive), or through private finance.
The purchase of capital is an investment and the NHS finance directorate is required to demonstrate a 'return '. The return could be measured financially by cost savings; it could also be in terms of benefits to staff or patients, or
Introduction
The government undertakes a variety of activities. They are responsible for setting macroeconomic policy; they seek to promote equity by aiding the poor and the disadvantaged and they provide a variety of services, such as education, health Care, defense, infrastructure, police and postal services.
Many of these activities involve large investments. Recent developments such as expanding the N3 Network infrastructure in preparation for the GP – Led health care commissioning across Britain have raised the issue of which of the investment proposal by the various service providers will be adopted and which assets should be owned by the public sector, whether assets have different values in the public and private sectors and how to price assets that are transferred between these two sectors. The crux of each of these questions is whether investment appraisal in the public sector should be different from the private sector. In this report I will be looking at investment appraisal within the UK health service organization (NHS)
Investment Appraisal is a critical tool in making key and strategic decision. By adopting it as a strategy, the NHS is more likely to achieve its objectives efficiently and effectively. It encourages the central government and managers alike to question and justify what they are doing and it sets the tone for thinking rationally about value for money. The majority of literature relating to investment appraisal provides instruction for large capital projects schemes, which are generally funded from centrally controlled resources, known as discretionary allocations or commissioning budget (that is at the discretion of the NHS Executive), or through private finance.
The purchase of capital is an investment and the NHS finance directorate is required to demonstrate a 'return '. The return could be measured financially by cost savings; it could also be in terms of benefits to staff or patients, or