Value for Money Evaluation
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As part of efforts to control Malaria in Sub-Saharan Africa, an NGO heavily allocates its funds to distribute mosquito nets to reduce mortality rates. However, would a large-scale investment in mosquito nets, necessarily reduce the number of people infected by Malaria, and increase life expectancy in the region? Would the costs be justified against the intended outcomes?
A Value for Money Evaluation (VfM) may be useful in such a scenario.
A VfM is based on the following premise:
“When designing and implementing an intervention, compare the costs and benefits of different options and make a defensible case for why the chosen approach provides the best use of resources and delivers the most value to poor and marginalised people.” (Bond, 2012, p. 4)
A VfM is described by an assessment of the money spent on the project, alongside what has been delivered by the project (outputs) and its achievements (outcomes). (INTRAC, 2020, p.1)
UK’s Department for International Development (DFID) defined Value for Money as “maximizing the impact of each pound spent to improve poor people’s lives.”. It is now a common practice in international development to use the 4E VfM framework against the standard results chain, as explained below:
Economy, focussing on effective input cost management.
Efficiency,, emphasizing on optimizing outputs using inputs.
Effectiveness,, assessing inputs in their impact on outputs.
Equity,, focusing on a fair distribution of benefits to beneficiaries.
List of recommended resources: #
For a broad overview #
Published by INTRAC for civil society, this 6-page brief gives an overview of VfM evaluation methods and lists down risks, opportunities and Do’s & Don’ts for practitioners.
This 4 page brief, offered by the OECD Development Cooperation Directorate, addresses confusions about Value for Money (VFM) by addressing the ‘Why’, ‘What’, for ‘Whom’ and ‘by When’ of the concept. It also promotes discussions about the relevance and limitations of this concept in development cooperation.
Developed by the UK’s Development of International Development, this resource explains the importance of understanding costs in tandem with outcomes to make informed, evidence-based decisions. It explains the VfM framework using multiple examples from its own work.
Complimenting DFID’s VfM Approach, this PowerPoint Presentation by Julian King gives a comprehensive overview of VfM approach using easy to understand visuals. More context to can be found in this blog from the Oxford Policy Management Institute.
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The video explains the 4E framework and practicalities of measuring VfM through simple visuals and easy to understand examples.
For in depth understanding #
Published by BetterEvaluation, this resource discusses in detail six primary methods for VfM evaluation – (a) Cost Effectiveness Analysis (CE analysis) (b) Cost Utility Analysis (CU analysis) (c) Cost Benefit Analysis (d) Social Return on Investment (SROI) (e) Rank correlation of cost vs impact (f) Basic Efficiency Resource Analysis (BER analysis). It guides practitioners on “When”,” Why”, and “How” aspects of these methods.
Written by Mango and the Value for Money Learning Group, this resource is a practical guide for NGOs interested in exploring VfM as a methodology. The 70 pager describes the utility of VfM, its methodologies, its application in an organizational context and the practical lessons learnt in adopting VfM methodologies
Case Study #
Developed by UK Aid Direct, this case study illustrates the Women for Women International project through DFID’s 4E framework.
The video resource highlights lessons learned after applying Value for Money (VfM) evaluation to WASH Programs in Sub-saharan Africa and South Asia.
This paper demonstrates the application of VfMs for Public Health investments implemented in conflict-affected South Sudan arguing for a growing need to embed VfMs in health programming, a holistic process framework to embed it, and highlighting the strengths and weaknesses of VfMs in the context of the case study.
Toolkits #
Developed by New Zealand Foreign Affairs and Trade Ministry, this resource provides VfM assessment tools and guides on VfM during the activity cycle.
Further Reading #
Developed by the Centre for Development Impact, this practice paper from Julian Barr and Angela Christie highlights the challenges of using the VfM concept to improve development impact, and proposes a VFM diagnostic tool to help meet this challenge developed over their years working with ITAD.
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This resource from Asian Development Bank discusses VfM from the perspective of the ADM procurement cycle. It introduces concepts as ‘life cycle costing’ – a combination of paid price, acquisition cost, and operational and maintenance costs.
