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Evaluating Value for Money
Julian King
August 2011
What is value for money?
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A measure of whether something
is worth doing, bearing in mind
other use of resources
“Are we satisfied that the resources should
be spent this way and not some other
way?”
Drummond et al (1987)
Why evaluate VFM?
Ensure Govt spends our taxes wisely
“The need to demonstrate value for money underpins accountability to Ministers and
Parliament, effective management, and the ability of New Zealanders to understand how their taxes
are spent.”
Treasury (2008) Demonstrating Value for Money http://www.treasury.govt.nz/publications/guidance/reporting/valueformoney
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Why evaluate VFM?
• Resources are limited
• 3 options
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1. Grow the economy 2. Reduce wants 3. Improve use of available resources
VFM = ‘using resources well’
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Who to do it for (targeting/means-testing)
“More for less” (improve efficiency, effectiveness,
cost-effectiveness)…
What to do and what not to do
How can we evaluate VFM?
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• What did we put in?
• What did we get out?
• Was it worth it??
• We do this all the time as consumers and investors
7 www.julianking.co.nz
A simple framework
Evaluating social investments is tricky
• Measuring social outcomes, not profits
• Outcomes are broad and multi-faceted
• Long time horizons
• Definition and attribution challenges
• Not just things we can count – also quality and inherent value – from a range of perspectives
• Trade-offs/winners and losers
• Unintended impacts
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Evaluation-specific approaches to VFM
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What do we mean by an
evaluation-specific approach?
• Fit for purpose
• Clear enough answers to important questions
• Gets to the heart of what value means in context
• Creates ownership of results and buy in to findings
• Based on Davidson 2005
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Getting to the heart of what value means
• Evaluative Rubrics
• Criteria agreed in advance
• How will we know when we’re looking at excellent VFM? Ordinary VFM? What’s the minimum acceptable VFM?
• Plain language – specific, unambiguous
• Linked to evidence, policy, strategy, stakeholder expectations
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Recommended reading
Davidson E.J. (2005). Evaluation Methodology Basics – The nuts and bolts of sound evaluation. Sage: Thousand Oaks, Calif.
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Recommended reading
Drummond MF, O’Brien B, Stoddart GL, Torrance GW. (1987). Methods for the Economic Evaluation of Health Care Programmes. Oxford University Press
Also see Treasury CBA guidelines at www.treasury.govt.nz;
UK Treasury’s Green Book.
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[email protected] 021 642 195
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Kinnect group | www.kinnect.co.nz
Julian King Nan Wehipeihana Kate McKegg Judy Oakden
Evaluation capacity building Evaluation-specific methodology Value for money Indigenous evaluation approaches Systems approaches
