1. Value for Money: an imposition, a duty, offers room for innovation?

2. Value for Money: an imposition, a duty, offers room for innovation?
Imposition - It is fair enough to say that VfM wouldn’t be so high on our agenda if it was not central to our donors. (DFID are leading the way on this).
But DFID are not imposing an approach but are pushing us to come up with one.
Duty – WWF-UK defines value for money as the efficient and effective use of resources to support the best possible results for people and nature. we have a responsibility:
To spend the money entrusted to us by our supporters and funders in the best possible way;
That our actions are beneficial to the communities we engage with;
And a desire and drive to make the “biggest bang for every Shilling we spend”.  
Innovation – Because of the new methodologies that vfm brings to conservation, there is plenty of room for innovation in making decisions but also in representing our results and convincing people that the environment is important.
Imposition - It is fair enough to say that VfM wouldn’t be so high on our PPA agenda if it was not central to DFID’s Strategy. It is and will remain a key topic under the PPA (and our reporting) as budgets remain squeezed and some members of British public feel that UK’s tax payers money should be spent elsewhere.
Duty – this external context has compelled us to defined more precisely what we mean  by VfM. WWF-UK defines value for money as the efficient and effective use of resources to support the best possible results for people and nature.  Understanding how to maximise value for money (VfM) has always been at the heart of what WWF does. At the same time VfM has always been regarded as a challenging topic due to the variety of results in which we are interested and the diversity of situations in which we operate.  
Nevertheless, we have a responsibility:
To spend the money entrusted to us by our supporters and funders in the best possible way;
That our actions are beneficial to the communities we engage with;
And a desire and drive to make the “biggest bang for every pound we spend”.  
Innovation – Because of the new methodologies that vfm brings to conservation, there is plenty of room for innovation in making decisions but also in representing our results and convincing people that the environment is important. And there are some interesting initiatives which are happening within the PPA that are interesting.

3. Economy: getting the best value inputs, minimising costs
Exploring the 4Es: understanding what is WWF’s current approach to value for money
Economy: getting the best value inputs, minimising costs
Efficiency: maximising the outputs for a given level of inputs, how much you get out for what you put in
Effectiveness: ensuring that the outputs deliver the desired outcomes, maximising the benefits
Equity: ensuring that the costs and benefits are distributed fairly
Exercise:
Exploring the 4 E framework: 1 sheet of paper divided into four – one quarter for each of the 4Es –ask each table to list the kind of systems, processes currently in place for each E…. 35 mins (split time between thinking and reporting back) 

4. Responses of the attendees
Economy: getting the best value inputs, minimising costs
Procurement process is competitive, pricing/quality is considered.
quotes for 3 supplier
List of service providers
Minimise cost by partnership
Pulling resources together
Use of IT
Procurement committee
Financial forecasting
Efficiency: maximising the outputs for a given level of inputs, how much you get out for what you put in
Use of partners
Right staff in right position, right place
Field supervision
Regular review meetings
Prioritisation
Staff appraisal
Service level agreement
Effectiveness: ensuring that the outputs deliver the desired outcomes, maximising the benefits
Strategic plan and operation plan
Internal control
Continuous monitoring and evaluation – ensuring we are getting what we have planned
Sustainability consideration
Dash board
Equity: ensuring that the costs and benefits are distributed fairly
Planning and budgeting with equity in mind
Participatory approaches
Programme standards
Focus on gender balance
Involvement of poor and marginalised in decision making
Alignment of cost
Financial forecasting with equity in mind
Responses collated from the group – to collate the responses each table was asked to offer one point at a time, once this point was captured we moved on to the next table then the next etc… until all points were catpured..

5. Lesson learned
We are not talking about ‘if’ we are doing vfm but more about the ‘how’ we are doing vfm and how good we are at it.

6. Food for thought: Whose values?
Donor
WWF
Programme stakeholders (e.g communities)
The values of these three groups may be very different. Whose perspective is important?

7. Value for Money and the programme cycle

8. Value for Money and the programme cycle:
For each stage of the programme cycle try and order the 4Es in terms of their “importance “– 1 being least important and 4 most important
Define (what is it you want to do?)
Design (how you are going to do it?)
Implement theprogramme
Analyse the results
Share your results
Economy
Efficiency
Effectiveness
Equity
Exercise: Within your table group, discussing the relationship between the 4Es

9. Value for Money and the programme cycle:
For each stage of the programme cycle try and order the 4Es in terms of “importance – 1 being least important and 4 most important
Define (what is it you want to do?)
Design (how you are going to do it?)
Implement theprogramme
Analyse the results
Share your results
Economy 8 9 17 4
Efficiency 11 12
Effectiveness 10 16 13
Equity 7 5
Exercise: For each stages of the

10. What have we learned? VfM is not about the money
Chart summarizes all the scoring of the previous slides.
1) Organisational economy and efficiency
Overall quality management system
Procurement process
Overhead costs
etc.
2) Individual programmes (programme cycle)
Managing through the cycle with VfM in mind
Sometimes deeper evaluative techniques (cost effectiveness, SROI)
3) Programme portfolio management
Supporting decision-making

11. Thank you!
This is like a simple version of the cycles in the VfM guidelines
Each PPA programme should try using this tool
Besides this, no common VfM ‘measures’ are expected other than responding to the PPA logframe and the Network’s common indicators where they are relevant.
4) Deeper programme analysis
Bespoke analysis as appropriate to each programme
Examples from Nepal and Colombia
‘Experimental’ – we cannot be certain what each analysis will tell us
Resources to support are available from WWF-UK
5) Ning sharing platform

12. 2nd session: VFM Tools
Broadly speaking Value for Money has two types of tools:
Tools that help you manage Value for money – VFM Management tools
Tools that help you measure your value for money – VFM Measuring tools
This is like a simple version of the cycles in the VfM guidelines
Each PPA programme should try using this tool
Besides this, no common VfM ‘measures’ are expected other than responding to the PPA logframe and the Network’s common indicators where they are relevant.
4) Deeper programme analysis
Bespoke analysis as appropriate to each programme
Examples from Nepal and Colombia
‘Experimental’ – we cannot be certain what each analysis will tell us
Resources to support are available from WWF-UK
* Still been discussed
5) Ning sharing platform

13. VFM Management tools: the programme level tool
Please rate your programme’s performance against each of the Factors in the tool and comment briefly on the reasons behind the ratings that you provide.
Equity criteria: We will assess ourselves against how we keep equity in mind when making economy, efficiency and effectiveness decisions.
Economy Criteria: There could be many criteria used to assess our organisational efforts to minimise costs, for this tool, we have decided to use benchmarking, procurement, supplier management and audit.
Efficiency Criteria: We will assess ourselves against tracking expenditures, tracking outputs, tracking ratios (outputs/expenditures and effective partnering.
Effectiveness Criteria: We will assess ourselves against our planning using the theory of change, delivery of perceived change, impact on biodiversity and/or footprint, performance linked to resources.

14. VFM Management tools: the programme level tool
Feedback?
The equity considerations in the tools are hard to put into practice – especially at economy level
The scoring is subjective
The evidence is more important than the scoring
The tool provides a useful framework to unpack vfm at programme level.
This is like a simple version of the cycles in the VfM guidelines
Each PPA programme should try using this tool
Besides this, no common VfM ‘measures’ are expected other than responding to the PPA logframe and the Network’s common indicators where they are relevant.
4) Deeper programme analysis
Bespoke analysis as appropriate to each programme
Examples from Nepal and Colombia
‘Experimental’ – we cannot be certain what each analysis will tell us
Resources to support are available from WWF-UK
5) Ning sharing platform

15. Value for Money Measurement tools:
Presentation

16. Value for Money Measurement tools: Economy
 VfM
Economy
Focal question
Are we buying inputs of the appropriate
quality at the right price?
Implementer
 HR, finance, programme manager
Data collection methods
Obtain costs for staff, consultants, raw materials and capital etc. that are used to produce outputs
Data analysis
 Simple
Most commonly used tool is average unit cost
Cost – driver analysis
Implication
Have an office benchmark
Identify the reasons of cost variations (external and internal factors)
Feedback from the group: Data analysis is not simple if you consider equity.

17. Value for Money Measurement tools: Economy
Cost Driver Analysis
A cost driver can be seen as any factor which causes a change in the cost of an activity (related to the ‘economy’ part of the 4Es framework). Last year WWF-UK used the standard Network accounting categories in the B3/R3 templates to identify key cost categories, and then explained the changes to these costs – see following example.

18. Value for Money Measurement tools: Cost-driver analysis
Internal cost drivers:
Staff Costs - WWF-UK participated again in the XpertHR salary survey for our sector, enabling us to benchmark salaries. Given last year’s restructuring, there was minimal need to adjust salaries this year.
Third Party Fees - We continue to make savings, supported by our electronic procurement system
Grants (primarily Programme) Costs -We use the ratio of actual expenditure/planned expenditure as one indicator of programme efficiency (ivbelow). At the strategic level, we manage the results/expenditure ratio and we increase the proportion of expenditure going towards overseas grants.
Other staff related - We’ve reduced environmental impact from business travel by 15% (516t carbon 2011/12 to 437t 2012/13), resulting in financial savings (air travel 2011/12 £205,000, 2012/13 £186,000).
Fundraising Costs - Fundraising teams work to targets assessing the cost effectiveness of fundraising. As an outcome of the Operations Review we will appoint a Finance Business Partner to support Fundraising in this.
Office Running Costs - Office running costs changed as we moved into our new headquarters in October 2013, which is also open to the public. The new building was certified “Outstanding”under the Building Research Establishment Environmental Assessment Method (BREEAM).
External cost drivers:
Exchange rates – Most WWF-UK income is in GBP while most expenditure is in local currency. To minimise effects of exchange rate fluctuations on programmes, grants are issued in the functional currency of the office - usually local currency.
We monitor foreign currency rates and enter into forward exchange contracts to hedge against exposure on certain currencies. Where relevant, implementing offices monitor the exchange rates from functional to local currency (in FY14 this led to a 10-12% Forex gain for WWF Nepal).
Inflation – Implementing offices monitor local inflation rates, and where these could increase costs, they may hold funds in hard currency until required.

19. Value for Money Measurement tools: Efficiency
 VfM
Efficiency
Focal question
 How well do we convert inputs into outputs?
Implementer
 HR, finance, programme managers
Data collection methods
As with economy plus detail of activities planned and delivered (e.g. as per logframe or workplan, monthly reports)
Data analysis
 Simple/ Moderate
Efficiency table
Average cost efficiency figures
Organisational vs. programmatic indicator
Implication
Able to look at efficiency or understand variations because of projects or locations.

20. An example of efficiency assessment sheet
NAME OF PROGRAMME
2012
2013
2014
Total spending ($)
Actual
Originally forecasted
Amount of output 1 or activity 1 undertaken
(e.g. no of workshops delivered; no of persons trained)
Amount of output 2 or activity 2 undertaken
(e.g. no of biogas plants installed etc.)

21. Value for Money Measurement tools: Effectiveness
 VfM
Effectiveness
Focal question
 How well are the outputs from an intervention achieving the desired outcome on people and the environment?
Implementer
Programme managers and implementing teams.
Specialist input?
Data collection methods
Indicator capable of demonstrating the magnitude of change
Stakeholder/ beneficiary feedback
Access to budgets & spendings
Data analysis
Moderate to more complicated or questionable?
Can require a degree of quantification of data:
Cost effectiveness tables
Attribution measures
Cost effectiveness analysis, cost benefit analysis, SROI
Or apply a descriptive approach to the change (backed with evidence)
Implication
A capacity to explain how our outputs lead to desired outcome
But be wary of data interpretation and meaningfulness of results; a qualitative analytical dimension is critical
May require putting a monetary tag on non-monetary goods

22. By demonstrating the added value of the intervention the VFM assessment in Putumayo and Caqueta leveraged a new grant with Patrimonio trust fund and USAID worth USD 2 million for smart production activities and a further USD250,000 to continue the climate vulnerability assessments.

23. Case study: Piloting Environmental Cost-Benefit Analysis in Putumayo, Colombia
The over-arching objectives of WWF’s intervention have been twofold:
Prevent the further degradation of ecosystems
Increase the revenue of farmers through 1) intensification of production via the application of new production techniques and management; and 2) the maintenance of those ecosystem services that are critical to the sustainability of production practices 
Introduction
As mentioned, we are encouraging PPA programme to undertake deeper analysis for their programmes. WWF-Colombia have piloted a CBA. The CBA was undertaken for the purpose of evaluating a Climate Change Adaptation and Biodiversity Conservation project, through livestock farming reconversion, in the Amazonian Andes (Region of Putumayo).
This analysis takes a case study approach. Instead of executing a “high level” CBA for the programme as a whole, the analysis deals with a specific project.
To give you a little background, the region of Putumayo is in the south of Colombia bordering Ecuador and Peru. There, livestock farming has been identified as the main driver of deterioration of the Amazon ecosystem, putting at risk not only the environment per se but equally economic activities relying on these critical ecosystem services.
The over-arching objectives of WWF’s intervention have been twofold:
Prevent the further degradation of ecosystems and subsequently improve them
Increase the revenue of farmers through 1) intensification of production via the application of new production techniques and management; and 2) the maintenance of those ecosystem services that are critical to the sustainability of production practices (e.g. preventing further soil degradation and water contamination). 

24. The cost-benefit analysis
Key benefits considered in the analysis and valuation methods
Impact
Valuation approach
Value per hectare per annum (Col. Pesos)
Increased agricultural and livestock revenue
Change of productivity per head
compared to baseline
(Empirical)
$4,250,000
Hydrological (water flow) regulation
Value of hydrological ecosystem services
per hectare of tropical forest, derived from TEEB
(Benefit Transfer)
$3,073,729
Climate regulation
Value of climate regulation ecosystem services per hectare of tropical forest,
derived from TEEB
$4,441,087
Water purification
Value of waste treatment and water purification per hectare, derived from TEEB
$400,037
Provision of raw material
Value of provisioning services per hectare of tropical forest ecosystems, derived from TEEB
$974,101
Cost-benefit analysis is a methodology which aims to compare the cost of an intervention to its impacts or benefitis.
When impacts are not economic, then non-market valuation techniques need to be used in order to express these non-monetar impacts inot monetary terms.
Rather than empriically deriving the value of ecosystem services, this CBA uses exisiting figures and transfers them to the site in question. This approach is by and large referred to as “benefits transfers”. A lot of those we used came from TEEB research…
This table summarises the key benefits considered in the analysis.
The cost figures, which are not presented here, considered both WWF budget and the investment of households.

25. Results
The cost and benefits occurring into the future (assumed 10 years) were discounted to represent their present value ie the worth in today’s money.
These results suggest that:
Benefits significantly outweigh costs, even when accounting for beneficiaries’ inputs into the projects.
If trusting these findings, the returns on investment are high: for each £1 invested in the intervention, between £10.5 and £14.6 are generated.
The fact that benefits outweigh costs by such a margin means that even if the benefits are over-estimated and/or costs under-estimated, positive returns should still be expected.

26. Equally important is to grasp where the value is generated.
In this case, the bulk of benefits are created in the form of imporved climate and hydrological regaulation services. Critically, the project equally improves the economic prospects of beneficiaries (17%)…
But we need to remain critical as to whether these figures are reliable.

27. Conclusion from the case study
Overall, this research is very encouraging. WWF-Colombia managed to apply a CBA methodology in a relatively comprehensive way.
Despite caveats, the returns that the project delivers are positive and high..
The critical review of the CBA process and findings pointed to points of improvement for future CBAs. The two major points of improvement required are a) a better consideration of the magnitude of change; and b) more consideration of the counterfactual (even in a qualitative form).
This briefing note presented the results of a first attempt to apply a CBA methodology for programmes and projects implemented and financed by WWF-Colombia. Overall, this research is very encouraging. WWF-Colombia managed to apply a CBA methodology in a relatively comprehensive way. It also considered the ES literature and managed to insert environmental impacts into a CBA balance sheet.
The results of the CBA are equally encouraging for the Climate Change Adaptation and Biodiversity Conservation Project in the Amazonian Andes. Despite caveats, the returns that the project delivers are positive and high. This intervention appears highly effective in delivering the intended changes.
The critical review of the CBA process and findings pointed to points of improvement for future CBAs. The two major points of improvement required are a) a better consideration of the magnitude of change; and b) more consideration of the counterfactual (even in a qualitative form) e.g would part of the impact would have happened anyway?
Experience to share from PC?

28. VFM Management tools: Organisational level tool
Review the 20 steps together with other stakeholders in your organisation. Discuss achievements to date and any future plans against each one.
Decide the timeframe over which you wish to rate progress. In the checklist the start date provided is March 2011 and the end date is March 2015 but these dates can be changed to something that is relevant to your organisation. Additional columns can be added to track progress at other time points.
Rate the progress to date using the colour coding system, selecting the appropriate shade of blue to represent the degree of progress made and filling this in next to each step.
In addition to a colour, assign a star to activities that represent new ideas being trialled by the organisation or innovation in the sector.
Complete the 'Evidence' column to list sources of information that can be used to verify the achievements which have listed.
The column labelled 'plans' is for you to list activities which the organisation intends to do against each step.

29. VFM Management tools: organisational level tool
Feedback?
As all the tables were trying to assess the same thing it was interesting to see the spread of scorings.
Reinforces the point that the scorings are indicative

30. Thank you
WWF Value for Money in Programme Management - Guidelines

31. Action Points for ensuring VfM in TCO and programs
Go back to your own programmes and come with 2-3 key actions points for the next 12/18 months
20 mins for discussion and 15 mins for sharing…