Regulatory Economics - Cost-Benefit Analysis of Policy

Adroit’s team members have been involved in cost benefit analysis work in relation to a wide range of both local, regional and some national policy fields, over a number of years.  We are particularly experienced at modelling the impossible or the difficult – which applies to many if not most regulatory policy areas.  There’s seldom enough data, there’s seldom a full understanding of the main implications/impacts associated with regulatory policy change.

 

We have developed and enhanced our techniques over the years, but one recent ongoing assignment over the last 3 years, for the Department of Communities and Local Government, has proved particularly pivotal in terms of development of approaches and techniques:

 

  • Adroit Economics and EC Harris have been working closely with DCLG officials over the last three years (2012-14), helping the department streamline and harmonise the building regulations and housing design standards for England.  The building regulations set out minimum design standards for all elements of building construction and the housing design standards set out addiotnal design guidance regarding new housing, addressing elements such as security, accessibility, energy, sustainable water management, minimum sizes etc.

  • Over the last decade or so, building regulations have become more complex than need be, reflecting a number of competing and sometimes conflicting requirements (British Standards, various EU standards, specific industry standards) and a plethora of local housing design standards have emerged.  This makes it more difficult and more expensive for volume builders who have to review and respond to an eclectic mix of standards that vary between localities.  Better harmonised, unified standards will save on architectural and engineering design time, on compliance process time and in some cases, on unit build costs…which together will reduce the cost of construction and speed up the construction process.  This has become increasingly important today as the UK construction industry emerges from recession and as costs are increasing exponentially.

  • The overall objective of revising the building regulations and housing design standards was therefore to harmonise and standardise where possible, thus saving the development and construction industry time, staff and material costs. 

  • Each proposed alternation represents a regulatory change and as such needs to be reviewed and approved by the UK Government’s Regulatory Policy Committee (RPC)… https://www.gov.uk/government/organisations/regulatory-policy-committee

  • Any Government Department proposing a regulatory change needs to submit a fully detailed Impact Assessment (IA) based on a detailed cost-benefit analysis to the RPC for scrutiny.  The RPC applies robust scrutiny to each proposed regulatory change.  All methodologies and metrics used in the cost-benefit analysis need to be evidence-based.

  • CLG senior economists prepared each Impact Assessment and the consultants’ role was to develop the cost-benefit methodology and the supporting evidence base.  Specifically EC Harris’s role was to provide unit build cost data, Adroit’s role was to scale this up to the level of England and to develop appropriate cost-benefit models to calculate the net benefits to the construction industry and to the economy of each and every proposed regulation change.

  • The work involved collecting and reviewing a very wide evidence- comprising a wide range of sources; the work involved developing a large number of specific impact methodologies and a whole series of often complex cost-benefit tools.

  • During the course of the work Adroit and EC Harris have worked increasingly closely with senior CLG officials.  We have also worked closely with the construction industry, with its representative bodies, with architectural and planning representative bodies, such as the HBF and RIBA, with relevant engineering organisations and with the Building Research Establishment (BRE),  Our team has also included, as required, architects, engineers and planners.

  • The work has been exacting and has proved immensely rewarding.  Through the work we feel that we have enhanced certain aspects of cost-benefit methodology, sensitivity testing, scenario analysis and risk modelling.

 

Value added we bring to this policy field:

  • Adroit’s team members have been involved in cost benefit analysis work in relation to a wide range of both local, regional and some national policy fields, over a number of years.  We are particularly experienced at modelling the impossible or the difficult – which applies to many if not most policy areas.  There’s seldom enough data, there’s seldom a full understanding of the main implications/impacts associated with policy change

 

Specialist models and research tools developed by the Adroit team:

  • Advanced cost-benefit analysis approaches and modelling techniques in complex regulatory policy fields