Improving the Practice of Value for Money Assessment

The Centre for Development Impact (CDI) – our joint evaluation innovation centre with IDS and UEA, has just published a Practice Paper on Value for Money (VFM) by Angela Christie and me.

This presents Itad views developed over the last couple of years, working on a range of VFM assignments, and builds on the methodological paper we produced recently. We also look back at the development of VFM, and it is striking that the concerns about VFM are not new – they are just new in development. More than 20 years ago, in relation to the growth of performance audits, Michael Power was asking ‘whether it has all gone too far?’ and whether ‘the language of quality and VFM [is] an elaborate rhetoric for cost reduction in the face of a public sector borrowing crisis?’. Sounds familiar. Maybe the development sector, and DFID in particular, has escaped the level of scrutiny long experienced by other Departments, and the rise of VFM has been commensurate with the rising aid budget.

In that context, our paper presents a framework for analysing and presenting the VFM of development investments, considering how indicators can be used to demonstrate a strong VFM ‘offer’. We argue that the way VFM offers are structured is likely to change over the course of an investment, from being economy focused early on, through a period of focusing on implementation efficiency, and concluding with an emphasis on investment effectiveness. This aims to offset the tendency (also voiced as a concern 20 years ago) that VFM risks concentrating in easy-to-measure economies.

Our paper goes on to illustrate the use of our VFM indicator framework in diverse settings in Ethiopia, India and Nigeria, and explains how we’ve had to tweak it to these contexts. Finally, it considers the similarities and differences between VFM audit and evaluation, and identifies opportunities to strengthen the practice of both. 

Julian Barr, April 2015

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