Developing a Value for Money proposition helps organizations determine how to achieve the greatest results with the resources available.
What is VfM?
VfM in international development refers to the efficient and effective utilization of resources to maximize the impact on the people that programmes are targetting and contribute to sustainable development. It involves making strategic choices that generate the best outcomes while considering the economic, social, environmental, and cultural dimensions of development interventions. Simply put, it means getting the most “bang for your buck” in terms of results and long-term value.
What is a Value for Money proposition?
A VfM proposition is critical for any development organization. It is a statement of the benefits and advantages that an organization offers to its stakeholders in relation to the cost of its products or services.
Steps that lead to a VfM proposition
Before developing a VfM proposition, a programme will need to address the following aspects:
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Define the Value.
A VfM proposition requires a clear definition of the value you want to achieve and what it looks like in practice. This involves identifying the outcomes that your organization wants to achieve, and the impact that these outcomes will have. For example, if your organization is working to reduce poverty, the outcome might be to increase income for individuals and families living below the poverty line. The impact of this outcome might be improved health, education, and well-being for these individuals and families.
2. Decide who the VfM analysis is for and whose value counts.
We tend to associate VfM to the donors who are providing funds for our programmes. However, we usually work with a variety of stakeholders, including the people that we are aiming to benefit. They are often omitted from VfM discussions even though it is their right to ensure we are accountable to them and that we are maximising the impact of the funds we are using. They often also invest in the implementation of the programmes we deliver, either in-kind or financially, for instance with their time, infrastructure and engagement. It is also our duty to demonstrate our VfM to them. Before developing a VfM proposition it is important to understand who our audience is and whose value we are putting at the centre of the analysis.
3. Identify the investment.
The next step is to identify the costs associated with achieving the outcomes and impact identified in step 1. This involves estimating the direct and indirect costs associated with delivering programs and services. Direct costs might include things like staff salaries, equipment, and supplies, while indirect costs might include overhead costs like rent, utilities, and administration. It is also worth taking into consideration the investment that other stakeholders are putting in the programme too, monetising where possible or rating it. This may include government infrastructure, community members’ time, partners’ offices and vehicles, etc. It is often helpful to cluster the investment around a series of areas of work to understand how resources are being distributed.
4. Assess how the value relates to the investment.
Once you have identified the costs associated with achieving your desired outcomes, the next step is to assess whether it has been worth investing in the different activities or areas of work. Have the activities made a difference in the local context? Who experienced the changes? How does this relate to the Theory of Change or Change Pathways? What other factors played a role? Can we identify ways in which the results could be further maximised? Our ambition is not to do the cheapest thing, but is there a way we could further optimise the use of the resources?
Developing a Value for Money propostion
Finally, it’s time to develop a value for money proposition that summarizes the findings from steps 1-4. This proposition should outline the value your organization is delivering (or aims to deliver), the investment associated with delivering that value, and how the investment relates to the value, including how this evidence is or will be used to improve the programme impact. It should also outline how the organization plans to improve its VfM in the future.
Developing a VfM proposition implies tackling the following aspects:
- State clearly which of your stakeholders the proposition is addressed to: The first step in developing a VfM proposition is to understand your stakeholders, and in particular their needs, expectations, and priorities. These are the people who are affected by your organization’s products or services. They can be donors, community members, partners, governments, or other organizations. The proposition should explain who the proposition is addressed to and the rationale behind it.
- Address the difference that your organisation or programme is making (or is expected to make): Once you have a clear understanding of your stakeholders, you need to clearly describe the value that the initiative is generating or aims to generate. The value can entail tangible or intangible changes, and they can include social, economic, and environmental benefits. For example, if your organization is working to improve access to clean water, the benefits could include improved health outcomes, increased economic productivity, and reduced environmental degradation. The value of an initiative is associated to the changes achieved or to be achieved and not to the activities that will be implemented.
- Provide an overview of the investment: After outlining the value, it is time to describe the costs and other financial or non-financial investment that will used to deliver activities that will contribute to making a difference. This includes both direct and indirect costs, such as personnel, equipment, and overhead expenses. You should also consider the opportunity costs of not pursuing other projects or initiatives as well as the investment of other actors involved in programme or in the programme area.
- Reflect on the VfM of the initiative: Once the value and the investment have been discussed separately, it is time to bring them together and reflect on which areas of work have been worth the investment. If the proposition is presented at proposal stage you may want to explain how you will gather the evidence and assess whether the areas of work you are implementing are worth the investment and how adaptations may be made when necessary.
Ultimately, the proposition should explain how your organization creates value for stakeholders and how it is sustainable in the long run.
It is also important to appropriately communicate your Value for Money proposition to your stakeholders. This can be done through various channels, such as reports, presentations, and social media, as well as videos, audios, etc. You should also be prepared to engage in dialogue with stakeholders to address any questions or concerns they may have.
Conclusions
In conclusion, developing a VfM proposition is an essential step for any development organization. By clearly defining the outcomes and impacts you want to achieve, identifying the investment associated with achieving those outcomes, assessing whether the investment is generating the desired value, you can ensure that your organization is using its resources in the most effective way possible to maximize impact and deliver value to those you serve.
If you need help or ideas to develop a VfM proposition, don’t hesitate to contact us! www.learningandchange.org
Learn more about our work on VfM here.
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