DFID’s Approach to Value for Money: Lessons from First 7 Years of Implementation

• In Event: What does value for money mean when it comes to educating a child?

Proposal

DFID’s approach to Value for Money (VfM) is about maximising the impact of each pound spent to improve poor people’s lives. This does not mean choosing the cheapest options or the easiest to measure, but improved measurement and understanding of relative costs and benefits, to achieve the desired results, including quality and sustainability, at the lowest price. The purpose of the VfM drive is to develop a better understanding (and better articulation) of costs and results so that we can make more informed, evidence-based choices, through a process of continuous improvement. DFID’s VfM agenda also focuses on improving transparency and accountability in operations, to help explain investment decisions to the public.

Equity is now a central consideration – spending for fairness. We will discuss how equity is considered at the design stage with risks and costs monitored throughout. The biggest challenge has been seen in measuring effectiveness i.e. how well the outputs from an intervention achieve the outcomes such as reduced absenteeism, improved completion rates or improved learning outcomes. Since no one donor can exercise direct control over outcomes we rely on strong, evidence based, theories of change which are revisited and tested. Cross-cutting drivers of value for money, such as country partner ownership and synergies between programmes have been the most challenging to measure and achieve yet are key to drive transformative change.

The presentation will describe DFID’s VfM framework and approach and will present findings from the recent performance review conducted by the Independent Commission for Aid Impact (ICAI). Lessons learnt from review highlighted the need for quality assurance when changing targets and building an evidence base beyond the individual programmes. The review also emphasized the need to develop methods for assessing value for money across different target group, to inform operational decision-making and to ensure equity of investments. While the review points out great success in improving cost control and holding implementers accountable for efficient delivery, achieving value for money goes beyond that. It also requires experimenting and adapting, and investing in long-term transformative change. New metrics and methods are needed to measure change in those dimensions.

Author

• Rachel Hinton, DFID