The term “options analysis” includes analytical methods that serve to systematically compare options for action. Options analysis is used, for instance, in regulatory impact assessments or in the valuation of investments. In a systematic comparison, options for action are evaluated for their effectiveness, associated costs and, for instance, also unintended consequences. Options analysis therefore raises the transparency and quality of decision-making processes.
For the systematic execution of an options analysis, methods are available that are based on quantitative information, i.e. on volume or monetary units as well as qualitative information, i.e. purely subjective information. The following focus points, amongst others, of the options analysis are possible:
- Cost-benefit analysis
If the concrete monetary value of the costs and benefits of certain reform alternatives is known, options can be compared on the basis of a cost-benefit analysis. The question can therefore be answered as to which processes will lead to greater benefits at the same or lower costs.
- Cost-effectiveness analysis
For reform alternatives where it is difficult to assess all the aspects in monetary terms, a cost-effectiveness analysis can be carried out. In this type of analysis, monetary values are combined with volumes and used to answer the question as to which alternative has the lowest cost per benefit unit.
- Multi-criteria analysis
If the underlying data consists of qualitative information or a mix of quantitative and qualitative information a multi-criteria analysis can be carried out, which makes it possible to systematically compare alternatives using different qualitative criteria such as, for instance, the degree of support for an intended reform in the population, the probability of implementation, etc.
- Cost-utility analysis
In the cost-utility analysis, quantitative information is compared using an assessment scale (also called “scoring”). In the context of the cost-utility analysis, qualitative information is systematically compared using a scale. The scales can range from “very high effect” through to “no or unknown effect” or “very negative effect” or from 0 to 10 or similar. The individual values can also be weighted. Scoring can be combined with a multi-criteria analysis.
1. Formulate alternatives
- After identifying the problem to be solved and defining the goals of the reform, reform or policy alternatives are formulated in the next step. Several proven formulation aids are available here:
- One option should be retaining the status quo (“no reform”, “no regulation”, etc.), i.e. the scenario “what happens if we do nothing?”. This option then serves as a comparison option.
- When formulating alternatives one should remain realistic and concentrate on a few alternatives that can be compared later, seriously and in detail.
- The focus should be on finding the cause of the problem, orienting oneself closely to the goals formulated earlier and referring to the problem to be solved in an appropriate manner.
- Alternatives to the traditional policy approaches should also be considered, such as promoting self-regulation, creating economic incentives or providing information on solutions.
- Intended reforms that are planned, prepared or already in implementation at other decision-making levels should be taken into account.
- Until the reform enters into force, timeframes should be set that are as appropriate as possible.
- The first step in the development of alternatives can take place with the aid of creative techniques, for instance as part of a future workshop. The approaches found in this way can then be selected according to ability to implement, effectiveness and efficiency (in advance).
- Definition of comparative criteria
Comparative criteria, according to which the options are to be analyzed, must be formulated in relation to the goals. Typically, the following criteria are used:
Effectiveness for goal attainment (effectiveness)
2. Costs and benefits
- Effects in relation to the economy, social environment and ecology
- Effects in relation to central stakeholders
- Direct and indirect effects
- Planned reforms can also have effects that only come to light when stakeholders are questioned
3. Compare alternatives
The core of the options analysis is ultimately to compare alternatives using the criteria identified earlier on. Existing literature and other sources are consulted or the underlying data are determined by means of surveys, statistical analyses or economic calculations. It is also possible – in particular in subjective assessments – to involve the stakeholders themselves in the assessment. The empiricism determined in this way can then be compared using methods and techniques such as cost-benefit analyses.
4. Compare alternatives using the example of the multi-criteria analysis with scoring (evaluation)
First, the information available on every option is compared by means of a table. The information can be in figures (quantitative) or it can be of a pure content (qualitative) nature. In addition, references to the quality of this information can also be made (e.g. information missing or can only be regarded as approximate). Finally, the scoring can be used to compare the available information using an assessment scale (see template).
5. Present the results and select the desired option
The results can be presented clearly in table form. This facilitates the overview on the advantages and disadvantages of each option and makes it possible to choose the option that represents a good compromise.
- Phase 2 – Agenda Setting:
- Competence: Analyze the specific problem and clarify the direction of the reform
- Communication: Ensure transparency; question stakeholders on alternatives
- Phase 3 – Formulating and decision-making:
- Competence: Assess alternative solutions and select the best alternative
- Communication: Emphasize the credibility and quality of the decision
- Capability to implement: Convince actors and win them over for implementation
Europäische Kommission. „Leitlinien zur Folgenabschätzung“ SEK(2009) 92. Brussels 2009.
Bertelsmann Stiftung „Leitfaden für Nachhaltigkeitsprüfung im Rahmen von Gesetzesfolgeabschätzungen“. Gütersloh 2011.
Katholische Stiftungsfachhochschule München „Zusammenfassung des Gutachtens zum Wert des Bürgerschaftlichen Engagements in Bayern“. Benediktbeuren 2008.