The feasibility study should look at all the options and appraise them properly. This will usually involve considering 'do nothing', and 'do minimum' options as a basis for comparison. It is important that the option appraisals look at not just the initial capital cost of building, but also the likely lifetime costs, as the maintenance and running costs of a building over its life are far greater than its initial capital cost. Lifetime costs for each option are adjusted using a standard discount rate, currently 6%, and then added together to give the net present value. This process enables costs occurring at different times to be expressed on a common basis. Option appraisal should also cover qualitative aspects, such as the contribution that buildings make towards raising educational standards, providing community facilities, design quality etc. Illustrative examples of appraisals of project options and their costs are shown in the plans of the secondary school (left).
Options appraisal can also be applied to identifying the most appropriate funding routes. Today, school building work can be funded from various sources including:
• Capital funding devolved to the school;
• LEA mainstream capital programme;
• Targeted capital funds;
• Lottery funding;
• PPP/PFI.

The DfES issues annual guidance on how to obtain funding for new capital projects. Schools and the LEA will need to decide which is the best approach. HM TreasuryÕs Green Book provides guidance on appraisal principles and the DfES will shortly be publishing guidance on option appraisal in relation to school building projects.

3.5 COST PLANNING

Costs of both new school building and refurbishment work are currently rising faster than general inflation. This is due to the present heavy national demand for building work coming up against skill shortages in the building industry, and to the increased complexity of school building and more stringent construction regulations. Schools with a number of community facilities will usually cost more, and LEAs need to bring together funding streams from various sources in a joined-up way to finance such schemes. A sustainable, good quality building with low maintenance requirements may cost more initially, but this should be more than offset by lower running costs. So it is important that the lifetime cost of the design is considered rather than just the initial capital cost (see Section 3.4).