In the field of international development, where resources are often limited and the stakes are high, ensuring value for money (VfM) is of utmost importance. Donors, governments, and development practitioners are increasingly seeking ways to assess whether it has been worth investing in certain interventions. This has led to the emergence of VFM benchmarks as a valuable tool for assessing the impact and value generated by development initiatives.
In this blog post, we explore what VfM means, how it’s evaluated, and its importance in development programming. We also examine the use of VfM benchmarks, including their benefits and disadvantages, and share how Learning and Change partnered with Cowater International to support the development of VfM benchmarks for the Gender Responsive Equitable Agriculture and Tourism (GREAT) programme in Vietnam. Ultimately, we highlight some aspects to take into consideration when developing VfM benchmarks.
What is Value for Money?
The UK Foreign and Commonwealth and Development Office (FCDO), formerly known as the Department for International Development (DFID), defines Value for Money (VfM) as the practice of maximizing the impact of each pound spent to improve the lives of impoverished people (DFID, 2011). This entails evaluating the value generated by an intervention relative to its implementation cost.
To evaluate VfM, many organizations use the 4Es framework, which considers Economy, Efficiency, Effectiveness, and Equity (and sometimes Cost-Effectiveness). For a programme to be deemed VfM, it must strike an optimal balance among these four components. To accomplish this, programmes typically identify a set of VfM indicators or criteria to monitor and demonstrate how they have addressed the 4Es. Some organizations use monetary valuation methods, such as Cost-Benefit Analysis (CBA) or Social Returns on Investment (SROI) whereas others opt for qualitative assessment methods.
It’s worth noting that one of the primary challenges with VfM is that it can oversimplify and view change as a linear process, assuming that desired positive changes in international development can be planned, controlled, and measured easily. However, international development organizations have adapted VfM approaches over time to better reflect their values and objectives, such as measuring VfM through a social impact lens. This means that the impact of an intervention is evaluated not just in terms of financial costs and benefits but also in terms of social benefits and investment.
What are VfM benchmarks?
VfM benchmarks can be a useful tool for tracking the effectiveness of development programmes in achieving their goals while managing their resources in the best possible way. It is now acknowledged across the sector that VfM benchmarks need to go beyond assessing cost-effectiveness alone. Instead, they should consider the long-term impact and sustainability of projects, to ensure that development efforts are sustainable and can continue to benefit communities even after the programme has ended.
Evaluating the VfM of a programme involves considering several areas that an organization identifies as important to its VfM strategy/framework. For example: results, resource allocation, costs, and systems. By assessing each of these areas, organizations can determine whether they have achieved the best balance of these components and delivered VfM.
Overall, VfM benchmarks provide a valuable framework for evaluating the effectiveness of development programmes. They are standards or points of reference that can be used at different stages of the programme implementation to assess the VfM performance of the programme. By considering multiple areas, including the long-term impact and sustainability of interventions, organizations can ensure that their efforts are maximizing their impact while making efficient use of resources. The use of VfM benchmarks is particularly important in evaluating interventions aimed at promoting issues like gender equality, as it helps ensure that these programmes are effective and sustainable in the long term.
The importance of VfM Benchmarks
Using VfM benchmarks has several advantages:
- They help teams review their strategies from a VfM perspective, focussing on the relationship between costs and results.
- They are useful when developed within a strategy, allowing to expand the Theory of Change (TOC), to also take into consideration the value that is expected to be generated.
- They promote accountability by requiring development programmes to demonstrate how funds are being utilized and the value being generated. This transparency helps build trust among stakeholders, including donors, governments, and local communities.
- They provide a basis for decision-making, allowing policymakers and programme managers to compare different programme strategies and prioritize those that offer the highest value. By identifying cost-effective strategies, resources can be allocated more efficiently, maximizing the impact of development programmes.
- Linked to the above, they facilitate a culture of continuous learning and adaptation in international development. Through rigorous monitoring and evaluation processes, organizations can capture valuable insights and lessons to inform future programming. This iterative approach enhances effectiveness over time, by focussing on continuous improvement and innovation.
- They contribute to improving programme design. By integrating VFM benchmarks in the planning phase, programme designers can identify potential risks, assess the feasibility of interventions, and make adjustments to maximize impact and minimize waste.
- They foster the long-term sustainability of development programmes. By assessing the VfM of interventions, resources can be optimized, reducing waste and improving the overall efficiency of programmes. This, in turn, increases the likelihood of achieving sustainable development outcomes.
However, there are also disadvantages to using VfM benchmarks. Predefined areas may not always be suitable for complex programmes delivered in contexts that change frequently. This implies a linear delivery of VfM and may not capture the nuances of programmes that are designed to respond to changes in context. Additionally, VfM benchmarks can be restrictive, as it is often easier to work backward to identify the VfM of a programme, allowing more space for the unexpected value that has been generated.
Overall, VfM benchmarks can provide a useful tool for assessing a programme’s efficiency, but it is important to consider their limitations and ensure that they are used appropriately in context.
Developing VfM Benchmarks for the GREAT programme
Learning and Change (L&C) partnered with Cowater International to support the development of VfM benchmarks for their AUS4Equality “Gender Responsive Equitable Agriculture and Tourism (GREAT)” programme in Vietnam, which has been promoting women’s economic empowerment in the northwest region of Vietnam since 2017..
GREAT targets women living in Son La and Lao Cai provinces, with an emphasis on economic inclusion for women from ethnic minority communities. In 2022, L&C supported GREAT to develop a VfM Framework, which describes the structure it uses to ensure that it is maximising its impact while managing its resources in the best possible way.
This structure is composed of 5 areas that GREAT intends to address in order to demonstrate whether it has been able to deliver VfM, described below. Being VfM means achieving the best balance of these areas, with People and Results being the two areas with the most weight.
- People – ensuring that women, particularly from ethnic minorities, are benefitting from the programme
- Results – maximising the results and impact of the programme
- Resource Allocation – adapting the programme to ensure that resources are allocated where the most systemic results are being achieved
- Costs – ensuring costs are reasonable given the quality required
- Systems – ensuring that GREAT and its partners have the appropriate systems to deliver VfM
To assess VfM performance GREAT has adopted a series of VfM Standards, which are rubrics and criteria that are used to assess the level of VfM performance (Significant, Satisfactory, Strengthening, Developing and Beginning), with a particular focus on how GREAT has addressed each of the 5 components of its VfM Framework. However, it is worth highlighting that for a project or sector to be considered VfM it must have at least achieved a Satisfactory level in the areas of People and Results. In other words and as explained in the framework, if it has not achieved its expected outcomes and not benefitted women, especially from ethnic minorities, it will not be considered to have delivered VfM.
GREAT works at different levels, one of these is at agricultural sector level where GREAT contributes to women’s economic empowerment by using a market systems development (MSD) approach in agricultural sectors such as bamboo, cinnamon, ramie, etc. Integrating VfM at the sector level means that VfM informs decisions made for a sector, including shaping the direction of the sector-wide interventions and steering approaches to optimize how the sector is performing in terms of VfM.
The VfM sector benchmarks were developed within the context of each sector strategy and were intended to provide a reference point for the team to assess the level of VfM performance using the sector-specific VfM standards of each sector being analysed. The findings of the VfM assessment are then used to provide recommendations and management actions for the subsequent planning period.
To develop the benchmarks, we first adapted all the VfM standards to each sector by reviewing each sector strategy and in particular the intervention areas and the sector-level outcomes. We then used these to develop VfM benchmarks that could be used in the mid-term and at the end of the programme. The benchmarks were then reviewed by the team and were also an opportunity to review and finetune the sector strategies, taking the VfM angle into account.
Four key tips for developing VfM benchmarks
- Clear Objectives: VFM benchmarks should align with the programme’s objectives and intended outcomes. Clearly defined goals provide a framework for evaluating performance and impact.
- Appropriate Metrics: Choosing relevant and measurable metrics is crucial for accurate assessment. A combination of quantitative and qualitative indicators can provide a comprehensive view of a programme’s performance.
- Contextual Factors: Development programmes operate within unique contexts, and VFM benchmarks should consider these factors. Social, cultural, economic, and political realities can influence the cost-effectiveness of interventions, and benchmarking should account for these nuances.
- Long-Term Perspective: VFM benchmarks should take a long-term perspective, considering not only short-term outputs but also the sustained impact of a programme. This requires monitoring and evaluation over an extended period to assess the programme’s effectiveness and value over time.
By providing a framework for evaluating the impact of interventions, VfM benchmarks can help ensure that development resources are used effectively and efficiently to achieve sustainable development outcomes. Overall, VfM benchmarks go beyond simply assessing the cost-effectiveness of projects, they also consider their long-term impact and sustainability.
If your organization needs a tailored VfM approach or wants to learn more about our VfM methodologies, please reach out to us at www.learningandchange.org
Learn more about our work on VfM here.