Helping improve the way in which Value for Money is measured and communicated

The UK government has in recent years given increasing attention to making sure public resources are being used efficiently and effectively to deliver results. This has become of particular importance with the overseas aid budget where, in a climate of government cutbacks, the Department of International Development’s (DFID) budget has gradually increased towards a target of 0.7% of national income.

In response, DFID country offices have been working together with service providers to develop frameworks for assuring and measuring that Value for Money (VFM) is being achieved in the delivery of the aid programme.

Itad has been at the forefront of this push to improve the way in which VFM is measured and reported; in recent years helping DFID develop an overall framework for VFM assessment and subsequently helping country offices and programmes design and implement their own specific approaches.

I work as the M&E Team Leader for the State Partnership for Accountability, Responsiveness and Capability (SPARC); a DFID governance programme designed to work with Nigerian state governments to help them improve the way resources are used to achieve the Millennium Development Goals. One of my roles has been to continuously improve the way in which SPARC measures and reports on the extent to which it is delivering Value for Money.

Whilst the concept of VFM is not new, formal VFM assessment within the development sector is an emerging field. SPARC, along with other DFID programmes in Nigeria has had to adjust and adapt to these emerging requirements. One way in which we have done this is to establish a VFM working group in which DFID and programme representatives identify and share ‘good practice’ in assessing and reporting VFM.

One initiative which this group is spearheading, and to which I am contributing, is the preparation of a ‘VFM Structured Approach Paper’. The main purpose of the paper is to provide guidance and a set of principles for developing VFM measurement frameworks, capturing relevant finance and results data, establishing information systems and communicating and using findings to influence programme management.

The VFM Structured Approach Paper draws on examples of good practice; including those within SPARC – which is recognised as having robust systems for measuring value for money. SPARCs approach to VFM has grown and developed over the last 3-4 years. With the help of Itad colleagues Chris Barnett and Angela Christie, SPARC’s approach has evolved from the piloting of methods in the 2010 Evaluation Study to the preparation of a specific VFM Working Paper in 2011 and 2012.

In addition to improving the way in which VFM is measured, we have tailored the way in which this is reported and communicated to various audiences. For example, we provide annual review teams with detailed relational data sets that enables spending to be linked to logframe indicators and the value delivered. We have integrated VFM reporting within quarterly progress reports which demonstrates the results of, and informs additional, management decision making. The annual VFM working paper contributes to external accountability and performance reporting and provides a detailed analysis of the extent to which the programme is delivering value for money. Finally, we have recently introduced an overall synthesis of VFM analysis in our annual report; designed to provide headline figures which are easily understandable by non-specialists. Examples of some of the infographics used in this analysis are shown below:

Over 2010 to 2012, for every £1 SPARC has spent, the State Governments with whom it works have spent an additional £7 on Health and Education.

VFM Figure 1

For every £30 spent, SPARC has made efficiency gains worth £1 through increasing the proportion of inputs delivered by national consultants and crowding in over £1,000,000 in direct government funding of programme initiatives.

VFM Figure 2

Since the beginning of the programme, SPARC has gradually imroved delivery of work plan milestones to 90%, whilst at the same time reducing the average consultancy fee rate by 16% – saving £1,000,000.

VFM Figure 3

Chris Perry

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