Doctors and managers in hospitals and primary care have to manage competing claims on their limited budgets. They have to decide what services to fund and what not to fund as well as the extent of funding. Extra resources will not remove the fundamental need to make such choices because healthcare needs and wants will always outstrip the resources available. Economic approaches to resource management at the local level have had limited success, partly because economists have failed to consider properly the practical challenges that managers and doctors face in making rational priority setting decisions. Ruta and colleagues described an approach called programme budgeting and marginal analysis, which they argue recognises the need to balance clinical autonomy with financial responsibility. We describe two checklists to aid managers and doctors in implementing local frameworks for resource management based on this approach. These checklists deal with pragmatic and ethical considerations that are central to the successful design and implementation of priority setting processes.