When it comes to evaluating projects or programs, the concept of “Value for Money” (VfM) is crucial. VfM is about assessing whether a project or program delivers the best outcomes for the resources invested. It’s not just about saving costs but ensuring that the money spent achieves meaningful results.
A simple approach to evaluate VfM is through cost-effectiveness analysis. This method compares the costs of different interventions to see which offers the best results for the investment. For example, if two health programs aim to reduce disease but one is more cost-effective than the other, it indicates that the more efficient program offers better VfM.
Another important aspect of VfM is assessing the relationship between costs, outcomes, and impact. Cost-benefit analysis (CBA) is of use here as it provides a comprehensive assessment by comparing the total expected costs against the total expected benefits of a project. It helps in determining whether the benefits justify the expenses, thereby guiding decision-makers in choosing projects that offer the greatest economic efficiency.
Return on Investment (ROI) is another key measure, indicating the financial gains relative to the initial investment. A high ROI signifies that the project not only regains its costs but also generates substantial profits.
Value for Money can often be assessed by analyzing financial performance. By monitoring financial performance, organizations can ensure that projects remain on track financially and deliver the anticipated value.
List of recommended resources #
For a broad overview #
This paper by Vera Scholz for INTRAC for civil society gives an overview of the term and concept of Value for Money (VfM), its principles, as well as different aspects of VfM analysis. The paper also provides a list of further reading and resources for detailed study.
Value for Money (VFM) and performance measurement in not-for-profit organizations
This article gives a brief overview of the importance of value for money in organizational performance management and focuses on the three E’s of value for money: Economy, Efficiency, and Effectiveness.
For in-depth understanding #
Integrating Value for Money and Impact Evaluations: Issues, Institutions, and Opportunities
This study examines why fewer than one in five impact evaluations incorporate a value-for-money analysis. The study concludes that increasing the number of impact evaluators trained in value-for-money methods, establishing rigorous costing standards, resolving methodological issues, and strengthening connections between policymakers and researchers would enhance the integration of value-for-money methods in impact evaluations.
This report by the World Bank presents some of the key issues in assessing Value-for-Money (VFM) that arose during a roundtable discussion, based on the experience of the participants.
Case study #
Community-based Procurement: Value for Money Analysis
This study aims to understand community-based procurement in relation to Value for Money (VFM), governance, and accountability in the World Bank’s Indian operations. The study on CBP was carried out in 84 successful subprojects from three Community-Driven Development (CDD) projects in India (in the states of Andhra Pradesh, Madhya Pradesh, and Tamil Nadu) and local government units (Gram Panchayats) in the state of Kerala.
Getting Value for Money in Social Service Delivery for Serbia: Synthesis Report
The aim of this review is to support the Serbian government’s effort to control the wage bill and improve efficiency and effectiveness in public administration by monitoring the value for money of service delivery in three sectors: (i) health, (ii) education, and (iii) labor and social policy.
