Value for Money – why is it important and how should it be done?

We chat to three evaluation experts to demystify Value for Money and find out what it means for development programmes...


A hot topic in development, Value for Money (VfM) is back in the spotlight thanks to a combination of factors. Today’s tighter financial controls mean funders need to know that their investments are being channelled into meaningful programmes while a renewed focus on transparency is seeing governments being held to account over aid spending and its impact.  

We caught up with evaluation experts Julian King, Patrick Ward and Shiva Faramarzifar to unpack the concept of VfM and find out more about the recently published second edition of their VfM guide for development projects and programmes. Here’s what they told us…

Q: What is value for money and what's its relevance to development? 

There is no universal definition for value for money (VfM) and government organisations have used a range of definitions that emphasise minimising wastage, delivering outputs, achieving outcomes, improving equity, and/or maximising outcomes for a given cost. 

We define VfM as good resource use. We regard VfM as an evaluative question about how well resources are used, and whether the resource use is justified. 

VfM has political and bureaucratic drivers that often stem from the need for accountability and transparency in the use of public resources. This is particularly true for international development because of limited aid budgets and political pressures to be accountable for the use of taxpayers’ money. 

But a good VfM assessment should also provide insights to support learning and improvement – improving VfM is not just about measuring VfM and being accountable for spending and results, it is also about having the systems for learning, adaptation and improvement to improve VfM at project, organisation, and systems levels[1].

Q: Who is it (or should it be) important to? Is VfM a donor-driven agenda?

Development specialists, policy and programme evaluators, and decision-makers all need clear answers to VfM questions to support sound resource allocation decisions and maximise impact. Programme implementers should make use of VfM frameworks as part of ongoing monitoring, as well as ‘stand-alone’ VfM assessments, to help guide management decisions.  

VfM should not be seen as simply a donor-driven agenda. VfM assessment is crucial for good resource allocation decisions and maximising aid impact, and the findings of VfM assessments are generally recognised as useful by a wide range of stakeholders. Our approach supports the use of VfM assessments to inform reflection, learning, adaptation, and building the evidence base about good resource use in different contexts, taking into account the perspectives of various stakeholders. It can be just as useful to a government ministry as to a donor.

Q: What sets your approach apart from other approaches to VfM assessment? 

Development specialists, policy and programme evaluators, and decision-makers recognise the importance of VfM questions but also acknowledge their complexity. Traditional approaches to VfM assessments tend to focus only on quantitative and economic analyses. These are valuable tools, but the assessments often fall short by being:

•    Accountability-focused, missing opportunities for reflection, learning, adaptation, and improvement. 
•    Simplistic, ignoring the complexities of real-world interventions.  
•    Focused on cost reduction at the expense of long-term value creation. 
•    Tied to narrow set of indicators devoid of any evaluative judgement, risking quantifiable factors overshadowing more nuanced consideration of quality, value and importance.
•    Donor-centric, neglecting perspectives cruicial to the communities supposed to benefit from a policy or programme.

Our approach addresses these concerns by:

•    Combining theory and practice from evaluation and economics. 
•    Using transparent, programme-specific definitions of good VfM – rubrics - to support sound evaluative judgements, allowing scrutiny of both evidence and reasoning.  
•    Sharing power with stakeholders to collaboratively develop rubrics that consider the programme’s value proposition from multiple perspectives. 
•    Aligning VfM assessment with broader MEL systems for efficiency and conceptual coherence.  
•    Incorporating both quantitative and qualitative evidence for a richer understanding than indicators alone can provide. 

Our Guide complements existing recommendations from organisations such as the UK Government’s Foreign, Commonwealth and Development Office, the Independent Commission for Aid Impact, the National Audit Office, and Itad, incorporating familiar elements like the 5Es (economy, efficiency, effectiveness, cost-effectiveness, and equity). Our approach doesn’t replace existing methods but offers a framework for aligning methods and tools to provide clear answers to VfM questions. It can accommodate traditional economic analyses, such as cost-effectiveness or cost-benefit analysis, as part of the overall approach. 

Q: How is the second edition of your Approach to Assessing Value for Money different from the first? 

The new edition builds on the initial Guide. It includes new sections providing additional guidance on developing VfM criteria and standards, as well as more recent examples and lessons learned from applying the approach in different settings, including to a pan-African development agency.

The new edition also discusses the integration of VfM with evaluations and monitoring, evaluation and learning (MEL) systems.  It is important to avoid VfM assessments becoming parallel, ‘stand-alone’ exercises, which sometimes happens. In evaluations, the VfM component should be designed in close coordination with other components, ensuring coherence in the approaches, data collection, analysis and presentation of findings. In MEL systems, the data needed for periodic, routine VfM assessments as part of programme management should be identified, collected, analysed and reported as part of the overall MEL and programme reporting system.

Q: What one thing about VfM analysis would you like people to take away from this interview? 

VfM assessment is evaluation. It should make use of explicit criteria (rubrics) for clarity and transparency and should draw on the full range of perspectives and evidence available. It  should inform management decisions and programme adaptation and be integrated into wider evaluation and MEL systems.

Click here for more information and to download the guide.

We were talking to...

Julian King is a New Zealand-based public policy consultant with extensive experience evaluating policies and programmes in both domestic and international development contexts. He is an Associate of Oxford Policy Management. 

Shiva Faramarzifar is a Senior Project Manager at Oxford Policy Management.

Patrick Ward is Oxford Policy Management’s Technical Director for Evidence and Evaluation. He has more than 20 years’ experience in evaluating social sector and other development programmes.

[1] FCDO Bilateral Review 2016b

Area of expertise