Economic Appraisal Vademecum 2021-2027 - General Principles and Sector Applications

The objective of this Economic Appraisal Vademecum (EAV) is to further promote and simplify the voluntary use of Economic Appraisal (EA) for EU co-financed investments in the 2021–2027 programming period. Carrying out EA is good practice for any EU-supported project, as it helps to ensure the optimal allocation of available funding and to verify that the projects supported are good value for money.

In this document, EA is defined as the process aimed at assessing if a project will contribute to overall social welfare and to economic growth. It takes into account benefits and costs to society and gauges the value that the project generates for all stakeholders, to determine if society will gain from the investment.

The EAV intends to ensure that appraisal is ‘fit for purpose’ and provides the necessary information for decision-makers at various decision points throughout the project cycle, while reducing the administrative burden not only for beneficiaries but also for those bodies involved in the management of EU funds.

For the 2021–2027 programming period and the cohesion policy funds, the use of Cost Benefit Analysis (CBA) is not a legal requirement, and the 2014 CBA guide is not a legally binding document. It is recommended, however, to keep following its provisions to assess the economic viability of large infrastructure investments. Starting from this basis, the EAV does not replace the 2014 CBA guide, but instead complements it in the following ways:

• it introduces the principles of proportionality and flexibility to EA, in particular for projects on a small scale or simple projects for which developing a fully fledged CBA might be unnecessarily burdensome or costly;
• it facilitates the practical application of the EA methodologies through the identification of established good practices;
• it covers additional sectors deemed to be relevant in the multiannual financial framework (MFF) for 2021–2027.

CBA remains the recommended appraisal tool, but other tools are suggested in specific circumstances based on sector, project type and scale.

The EAV is not prescriptive and should not be understood as an enforcement tool of EU legislation. Member States can draw on the information presented to set up a framework for both project appraisal and selection that is in line with international good practices. In particular, they can use it to better define their methods and criteria to approve investments in a context of transparency and accountability of public expenditure.

As EA tools can be used across different EU/national policy sectors and institutions, the EAV is not linked exclusively to the cohesion policy and is a resource that can be used across different funds in the 2021–2027 financial perspective.

Finally, it is worth underlining that the EAV covers economic (and to some extent financial) appraisal only. Other important aspects of project appraisal (e.g. demand; technical, environmental, legal and procurement aspects; and risk assessments) are not discussed in this document. This is not to say that these aspects should not be assessed, but they would be better dealt with within a project preparation guide than within a guide for EA. Where relevant, the EAV makes reference to existing guidance documents and methodologies that help in dealing with these aspects in a sound manner.

The Spreadsheet was prepared by Dr. Linas Jasiukevičius under an assignment by the European Commission and also benefitted from advice of JASPERS  (Massimo Marra, Davide Sartori, Sarunas Bruzge) and from CINEA (Julien Bollati).

Note: the spreadsheet contains macros that might be blocked by security settings of your organization. In that case, please consult your local informatics department if they can be enabled.