Value for Money

Question

How are other donors approaching ‘value for money’ in their aid programming? Of particular interest are:
(i.) how are other donors interpreting value for money; and
(ii.) what tools they are using to assess value for money?

Summary

DFID appears to have gone the furthest among aid agencies in developing the concept of ‘value for money’ (VFM). It is the only agency that explicitly uses the terminology frequently in its policies and procedures and has a Value for Money department. DFID’s approach to VFM involves ‘assessing whether level of results achieved represent good value for money against the costs incurred: moving from “results to returns”’ (OECD, 2010). Processes include the use of logframes, economic appraisals and portfolio reviews. Newer initiatives include the adoption of a business case model for project approval and the development of unit cost metrics in key sectors. Other donors, while not explicitly adopting ‘value for money’ terminology, aim to achieve VFM through rigorous economic analysis and results-based management.

The ‘value for money’ agenda has also been linked to efforts to improve accountability and transparency. Aid agencies and their partner countries need to be seen to be managing aid responsibility and to have accountability checks in place. This requires strengthening audit bodies, parliaments, media, civil societies and independent watchdogs such that they can hold government to account for spending. It also involves greater transparency, in particular publishing information on projects and allocation of funds.