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Principles of the Generic Economic Model

  • Last modified date:
    15 February 2007
This guidance is a revision of the GEM first published in 2001 to include the changes to the Treasury's Green Book published in 2003. It sets out the principles used to appraise the economic costs of NHS building schemes at OBC and FBC stage and a guide to using the model.

The revised GEM incorporates the new discount rates and includes a framework for including optimism bias (though the scale of the adjustment for optimism bias needs to be calculated outside the model).  Links to specific optimism guidance are provided.

Following the introduction of HMTs 'VFM Assessment Guidance':

  1. The guidance is still relevant in all cases for the appraisal to decide the preferred option at OBC (but not the procurement route).
  2. It is also to be used for PFI FBCs where the schemes submitted their OBCs before April 2005 and all publicly funded FBCs.

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