Options Appraisal in a Decision Memo: How to Write a Memo That Helps Management Choose

What makes a memo a decision memo?

Many management memos explain the problem well and then end with a general recommendation. A decision memo starts instead with the question the decision maker must answer and puts real options in front of them to choose between.

The Institute for Government sums up what a decision maker needs from a submission in three elements: why a decision is needed, the options with the risks and benefits of each, and a recommendation. ^[2] It also reminds decision makers that officials are there to give expert advice, while they are there to exercise judgement. ^[2] A good memo does not pre-empt the decision; it makes its basis clear.

How do you frame the decision required?

A good decision statement is one sentence the decision maker can answer by approving, rejecting or choosing an option. Compare two versions:

• Weak: “We submit a study on improving the enquiry response service.”
• Decision statement: “We ask you to approve one of four options for improving the enquiry response service before next year’s budget is prepared; we recommend developing self-service, subject to a successful limited trial.”

The second version contains four elements: what is to be approved, who approves it, when the decision is needed and why now. If there is no date by which a decision is needed, the memo may be for information rather than decision, and it should say so plainly.

State the objective against which the options will be measured before presenting them, such as shorter response times or lower cost without lowering service levels. Options can only be compared against one declared objective; otherwise each is measured against whatever criterion suits it.

How do you build the list of options?

Start with a wide longlist, then filter it against one test: does the option meet the objective? HM Treasury’s Green Book recommends generating a broad range of options to avoid narrow thinking, and documenting how options were generated and why any were rejected. ^[1]

The one exception to filtering is business as usual, which must always go forward to the shortlist as the benchmark for comparison. ^[1] The Green Book notes that a shortlist typically contains around five options, including business as usual, a do-minimum that just meets the objectives, the preferred way forward, and more and less ambitious variants of it. ^[1]

How do you make options comparable?

Define the appraisal period and the success measure, then assess every option on the same terms. Describe business as usual fairly, neither overstated nor understated, because it is the yardstick for the other options. ^[1] The do-minimum option shows whether the extras in the other options are necessary or merely gold plating. ^[1]

Separate one-off costs from recurring costs over the appraisal period; the cheapest option in its first year may be the most expensive over its life. The Green Book requires costs to cover the proposal’s full lifetime and estimates to be adjusted for the known tendency to optimism, by raising estimates of cost and duration and lowering estimates of benefits. ^[1]

Should you use weights and scores?

Many organisations turn to a criteria table with weights and scores. The Green Book, however, explicitly recommends against using simple multi-criteria analysis in decision making, because its weighting and scoring lacks an objective basis and can reduce transparency; it points instead to the more rigorous multi-criteria decision analysis, which needs an expert facilitator. ^[1]

If your organisation’s policy requires a scoring table, treat it as a tool for discussion, not a verdict: record who set the weights and when, explain the basis of each score, and show whether the ranking changes if the weight of a single criterion changes.

How do you show uncertainty?

Give each influential figure a central estimate and a range, and explain the assumptions behind it. ^[1] Then carry out sensitivity analysis on at least the preferred option and calculate the switching value: the value a key assumption would need to reach for the option to stop being value for money. ^[1]

A switching value is clearer to a decision maker than long sensitivity tables. A sentence such as “this option loses its advantage if take-up falls below X” puts the real question in front of them: is that assumption realistic?

Do not pick the assumptions to test at random. Start with three: the one carrying the largest share of the benefit, the one whose source you trust least, and the one the organisation does not control, such as customer behaviour or supplier prices. A large or high-risk proposal may need deeper methods, such as scenario analysis or decision trees, in proportion to its cost and risk. ^[1]

The Green Book requires explicit adjustments for optimism bias and treats contingency as a separate allowance in the financial case. ^[1] Show these adjustments in the memo itself, not just inside the figures, so the decision maker knows how much of the estimated cost is contingency and how much is the core estimate.

Hypothetical example: answering customer enquiries

Hypothetical example: a Gulf organisation is looking at how to improve its response to customer enquiries, and the analyst compared four options: business as usual, extending the current team’s hours, outsourcing to an external provider, and developing self-service.

The last option looked cheapest, provided a large share of customers used the new channel. The analyst calculated the switching value and found that the savings appear only if take-up reaches a higher level than the organisation has achieved on any previous digital channel. He proposed a time-limited trial, with a clear condition to scale up if the required take-up was reached and to fall back on extended hours if it was not. The analyst did not present the cheapest option as the answer, but the condition under which it would be; management faced a clear decision that could be reviewed after the trial instead of an open-ended commitment lasting years.

What goes on the first page?

Put the decision required, the recommended option, the owner for implementation and the single assumption most likely to change the choice on the first page. Leave detailed calculations for the annex. Where departments disagree about a criterion, explain how the disagreement affects the ranking rather than hiding it.

Before submitting the memo, check it for mistakes that recur in decision memos:

• One real option and token alternatives added to justify the recommendation, which an experienced decision maker spots quickly.
• No business-as-usual option in the comparison, so every option looks like an improvement without showing what it actually adds.
• Figures with no source or stated assumption, so the reader cannot judge whether they are reasonable.
• Comparisons over different periods, such as one year’s cost for one option and three years’ for another.
• A recommendation with no condition or review point, turning the decision into an open-ended commitment even if its assumptions fail.

State how you will know after implementation whether the decision worked. The UK government’s evaluation guidance, the Magenta Book, calls for evaluation to be built into the design of any intervention from the earliest stages, not added once it is over. ^[3] The Green Book lists research, evaluations of previous interventions and pilot studies among the ways of reducing uncertainty. ^[1]

Conclusion

A good decision memo does not sell management a ready-made choice; it sets out fair options, led by business as usual, and reveals the assumption that changes the ranking. Start with the decision required and end with the condition under which it will be reviewed.