Published on March 12, 2014
The Value for Money approach Keys for projects evaluation in development co-operation and humanitarian aid Neus Martí Sanz | firstname.lastname@example.org Briefs No.2 Imagesource:www.panos.org.uk Based on: Jackson, P. 2012. Value for money and international development: Deconstructing myths to promote a more constructive discussion. OECD Development Co- operation Directorate.
The assessment of the value for money is relevant to development co-operation and humanitarian aid despite inherent complexity and uncertainty of socio- ecological systems. 1 Briefs No.2 Imagesource:www.oxfam.com Neus Martí Sanz | email@example.com
Development funds should be used as effectively as possible How much is spent sometimes overshadows the more fundamental question of what the funds achieve Aid agencies are increasingly expected to understand and demonstrate the value for money of their work to those who are paying the bills, i.e. tax payers. [...] – Jackson, 2012 Neus Martí Sanz | firstname.lastname@example.org
Value for money is an analytical and management approach to find the right balance between economy, efficiency, effectiveness and equity. 2 Briefs No.2 It cannot be assessed through only one of these dimensions Imagesource:www.aid.dfat.gov.au
Value for money is not synonymous with either economy (i.e. reducing the cost of inputs) or efficiency Value for money does not need to be about monetizing everything and applying cost- benefit or cost-effectiveness analyses Reducing the costs of inputs and making efficiency savings can either support or undermine value for money […] - Jackson, 2012 Neus Martí Sanz | email@example.com
The Value for Money assessment has to address the quality of the outcomes as it is fundamental to understand whether the project is providing value. 3 Briefs No.2 Imagesource:AsociaciónAndes Neus Martí Sanz | firstname.lastname@example.org
Effectiveness is a component of VfM If the effectiveness of an activity is notably reduced because of a small cost saving, value for money is reduced. Similarly, while an activity may be very cheap and run efficiently, if it does not achieve results, it is not value for money [...] Reducing the costs of inputs and making efficiency savings can either support or undermine value for money […] – Jackson, 2012 Neus Martí Sanz | email@example.com
Briefs No.2 Imagesource:www.Ipa.netzwerk.de The Value for Money assessment entails research design and strong methodological capacities of involved teams. 4 Neus Martí Sanz | firstname.lastname@example.org
[…] Value for money at different levels [the portfolio, country and project level] requires different approaches . For example, looking at unit costs may be useful in deciding between two providers of a service within a single project, but comparing unit costs between whole countries can be misleading. Similarly, it is hard to compare value for money between sectors: for example, both education and agriculture are important, but focusing on one over another is a policy decision, and not a value for money decision. – Jackson, 2012 Neus Martí Sanz | email@example.com
Limitations of the Value for Money assessment have to be considered when using results for decision making. Caution with results comparison. 5 Briefs No.2 Imagesource:www.unep.org Neus Martí Sanz | firstname.lastname@example.org
The availability of information may be too poor to make any reliable assessment [ There is a lack of agreement on value for money for whom…the question of value for money from whose perspective is important since the immediate beneficiaries and funders are not the same. Indecision amongst donors about whom they are accountable to, and whose voice is important in holding them accountable. By when should the benefits of an intervention be realized in order for the costs to be justified?... some types of interventions take much longer to bear results than others. - Jackson, 2012 Neus Martí Sanz | email@example.com
Danger that applying value for money could lead to a risk-averse culture in development co-operation 6 Briefs No.2 Imagesource:www.oxfam.com Neus Martí Sanz | firstname.lastname@example.org
Allocating aid to the “best performing” countries will mean the more difficult contexts, such as fragile states, lose out. However, by looking at where need is greatest and where conflict prevention can save millions, it can be seen as good value for money to invest in those countries. Insisting on exact measurements of efficiency, unit costs, cost-benefit in all projects can exclude types of projects where these things are harder to measure, encouraging a focus on things that are easier to measure rather than on what is most needed or even most effective. It can encourage a focus on easy-to-reach groups rather than riskier targets, such as those in harder-to- reach areas, minority groups and others - Jackson, 2012 Neus Martí Sanz | email@example.com
When opperating the VfM approach, it becomes necessary to define clear objectives and parameters. Methodological choices will be then deployed Neus Martí Sanz | firstname.lastname@example.org Core ideas 1
Core ideas Neus Martí Sanz | email@example.com Recognizing analytical and operative assumptions will reinforce accuracy and reliability of results and conclusions. 2
Core ideas Neus Martí Sanz | firstname.lastname@example.org Process and results constraints are factors to be taken into account when using VfM results in decisions making processes. 3
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