Flood and coastal defence: develop a project business case
- Environment Agency
- Part of:
- Flood and coastal defence funding: for risk management authorities, Flooding and coastal change, and Flooding and coastal change
- First published:
- 27 March 2014
- Last updated:
- 9 December 2015, see all updates
- Applies to:
Steps risk management authorities should take to get technical and financial approval for flood and coastal erosion projects or strategies.
1. Contact your Environment Agency (EA) Area Flood and Coastal Risk Manager
Once you have identified a need and your project is included in the programme of flood and coastal erosion risk management schemes, tell your Area Flood and Coastal Risk Manager that you are starting your appraisal. You can arrange support to do this from EA with your Area Flood and Coastal Risk Manager. This may include help with the economic appraisal. You’ll also agree a submission date with them.
2. Follow the appraisal process
This stage identifies the preferred approach to reduce the risk of flood or coastal erosion. The outcome of the appraisal process is a business case for the project you are developing.
By following EA’s appraisal guidance, you will keep to the Department for Environment, Food and Rural Affairs (Defra’s) policy statement. The appraisal process applies to new and on-going flood and coastal erosion risk management (FCERM) strategies and projects funded by government. This includes those carried out by maritime local authorities. They have coastal erosion responsibilities under the Coast Protection Act 1949.
There is more appraisal guidance for specific tasks that you might carry out during an appraisal:
- FCERM economic appraisal spreadsheet assist economic analysis
- appraisal summary table supporting note enables the clear presentation of negative and positive impacts to aid the consideration of wider issues within the appraisal
- apply the scoring and weighting methodology to complete economic valuations of more intangible benefit types
- adapting to climate change demonstrates how risk management authorities can account for climate change within their FCERM investment decisions
- risk to people guidance covers a method for the evaluation of the risk to life associated with flood risks
- interim guidance note takes account of Defra’s policy on socio-economic equity and appraisal of human-related impacts of flooding
- treatment of risk describes the latest approach to project optimism bias
There is also supporting guidance for tasks that you do in certain circumstances during an appraisal:
- economic evaluation of environmental effects assists in applying a monetary value to environmental effects associated with FCERM schemes
- assessment of coastal erosion and landsliding provides guidance on coastal erosion, cliff instability and coastal landslides
- treatment of agricultural land provides an update on the valuation of agricultural land and output
3. Complete the templates for technical approval
You need to submit the relevant forms with your project business case to get approval. From April 2016, EA will replace the Project Appraisal Report (PAR) with 2 new templates. You need to complete the business case using the template that is appropriate for the cost of your project. This change is to align with HM Treasury’s Five Case Model.
Choose the correct template for your appraisal:
- Short Form Business Case template to request approval of an FCERM scheme with a capital cost less than £2 million
- Business Case template to request approval of an FCERM scheme with a capital cost more than £2 million
- Strategy Appraisal Report (StAR) - the template provides a basis for writing your strategy – your local EA contact can advise you how to prepare it
You should tell your local EA contact when you start to write a business case or a StAR.
In accordance with HM Treasury’s Five Case Model, you must develop the business case in 3 phases.
- Strategic Outline Case (SOC) – the case for change.
- Outline Business Case (OBC) – preferred option.
- Full Business Case (FBC) – detailed design and firm prices.
You must get technical approval from EA at the OBC stage. EA must notify Defra and HM Treasury if the whole life cost of your project is likely to exceed £50 million. If this is the case, you must submit an SOC to EA before developing your business case further. A FBC will also be required.
Choose the correct form for flood risk schemes:
- FCERM2 - application for grant funding form to apply for funding to undertake an FCERM scheme
- FCERM7 - application for studies and strategies approval form to apply for funding to undertake an FCERM study
For an FCERM7, you can present the study in a format of your choice and a strategy on the strategy appraisal report (StAR) template. A study could lead to a strategy, a management plan, investigate options for schemes of works, or investigate the environmental impacts of FCERM on an area of statutory environmental designation. The Grant Memorandum explains the full definition.
The 2011 and 2012 Grant Memorandums are no longer on GOV.UK. You can get a copy of them by emailing LAIDBFINANCE@environment-agency.gov.uk.
Use 2 forms for coastal erosion schemes:
- CPA1 – certificate of statutory consultations and response for coastal erosion schemes
- CPA2 – application for formal approval of coast protection project
You must complete a contributions and efficiencies data sheet for all schemes. This helps to show that EA is meeting government targets. Contact your local EA contact for a copy.
Check with your EA Area Flood and Coastal Risk Manager that your project has allocated funding. This might be an indicative allocation of government capital grant, partnership funding or a mixture of both.
4. Send your Short Form or Business Case and application forms to EA
Send 2 copies of your completed business case and the forms to your Area Flood and Coastal Risk Manager either by email or by post. You can submit the copies on a CD/DVD. If the cost of the project is less than £100,000, your Area Flood and Coastal Risk Manager can approve it. If the cost of the project is £100,000 or more then you may need to attend a technical review meeting.
5. Attend a technical review meeting
EA Large Project Review Group (LPRG) assures projects that cost more than £10 million (or if there are significant environmental impacts). EA National Project Assurance Service (NPAS) assures projects that cost between £100,000 and £10 million. Once your project is assured, EA will recommend your project for financial approval.
To get assurance from LPRG, your project executive or project manager will need to present it at an LPRG meeting and answer any questions. EA will provide feedback immediately if you attend the meeting or in 2 to 4 weeks if you don’t.
To get assurance from NPAS you don’t usually need to attend a face-to-face meeting. Your project executive or manager may need to answer technical questions through correspondence or teleconferences. This could take approximately 2 to 3 weeks. Projects that are estimated to be between £2 million and £10 million may need a face-to-face meeting. After NPAS assure your project it will go forward for financial approval.
Defra will determine the assurance and approval arrangements for projects with an estimated whole life cost of more than £50 million.
6. Get financial approval (excluding coastal erosion work)
Once approved, your Area Flood and Coastal Risk Manager will write to you with a grant approval number. You’ll need this to apply for capital grant in aid payments.
7. Coastal erosion work (excluding studies): tendering stage
The process is different for coastal erosion work (excluding studies). To get technical approval you should send a CPA1 to them with your OBC to the Area Flood and Coastal Risk Manager. After technical approval, you can ask for tenders to do the work. To apply for formal grant approval you need to send the CPA2, with supporting information (usually a FBC which is the OBC updated with tender prices and the tender assessment report) to the Area Flood and Coastal Risk Manager. They will pass this to the Director of FCRM and the business finance department for financial approval.
After the tendering stage, your Area Flood and Coastal Risk Manager will write to you with a grant approval number. You’ll need this to apply for capital grant-in-aid payments.
8. Exceptions to the process: emergency works
You do not need to wait for formal approval from EA to carry out emergency works (section 5 (6) of the Coast Protection Act). But, if you intend to claim capital grant-in-aid for emergency works you will need to seek both technical and financial approval as soon as possible from:
- your Area Flood and Coastal Risk Manager at EA
- the Director of FCRM at EA
- your contact in EA business finance
If you need to do emergency works on designated environmental sites, you must seek approval from Natural England. You will not be able to claim capital grant in aid without this approval.
Contact the EA
PO Box 544
Monday to Friday, 8am to 6pm 0370 8506 506.
From outside the UK +44 1709 389 201.
Published: 27 March 2014
Updated: 9 December 2015
- Updated link to appraisal policy guidance and adapting to climate change guidance in section 2.
- Forms and guidance updated.
- EA has changed the way it assures projects between £100,000 and £10 million and clarification of the appraisal process.
- Links to the appraisal documents on EA and Defra archived websites fixed
- First published.
From: Environment Agency