1. DFID’s work on VFM so far…
Claire Vallings
Governance and Social Development Department
DFID
30 March 2011

2. OVERVIEW
Value for Money generally in DFID
Value for Money in Governance

3. VFM is about improving aid effectiveness:
DFID’s VFM Thinking
VFM is about improving aid effectiveness:
- “we maximise the impact of UK aid so it makes the most difference to the poorest people in the world”
This requires:
Clear Vision
Clear Results
Robust Partnerships
Strong Organisational Processes
Maximum Value

4. ‘How To’ Guidance and fixed ‘formulae’ Analysis delinked from process
VFM is not about
‘How To’ Guidance and fixed ‘formulae’
Analysis delinked from process
An add on
Race to the bottom / cheapest
(Education in Ghana vs DRC)
Risk avoidance
Measuring only what can be measured

5. Proportionate, considered approach Maximising resources
VFM is about
Proportionate, considered approach
Maximising resources
Using common sense
not ‘what’s the VFM of conflict prevention?’
but ‘am I preventing conflict as cost effectively as I can?’
Being consistent – what do you want to achieve?
Be realistic;
Commitment to learning / monitoring, piloting
Showing evidence
You cannot delink analysis from programme design – give available data on unit costs and justify why this is VFM
VFM flows from a strong focus on results: logframes, PDs / BCs, budgets, and any other relevant documentation should all tell a coherent story of anticipated change
Questions we ask are:
- Are there recent examples to show how CSOs ensure value for money in their work?
- Is there evidence to show that CSOs think about cost effectiveness in decision making and resource allocation?
- Is funding performance based within the organisation?
- Have CSOs used any comparators (either internal or external) to highlight value for money?
- Are robust monitoring and evaluation systems in place?
- Is there evidence to show that CSOs are continually looking to improve value for money?
- How does the organisation control administrative costs?
- Is there evidence that the organisation achieves economy in purchase of inputs?
- Are robust financial management, accountability and auditing arrangements in place?

6. Overall
Joint learning process – DFID doesn’t have all the answers. But keen to share knowledge and lessons
Continual improvement rather than a hurdle to jump over
VFM should reinforce poverty and results focus, and enhance effective partnerships
Building an organisational VFM culture, with partners
Trail blazing - innovation welcome!

7. Where are we on governance?
Indicators
VFM Analytical Framework / Approach

8. Indicators
Theory of Change: articulate the logic of intervention
Confusion btw output and outcome
Need more on gender and pro-poor outcomes
Possible over-reliance on perceptions
Future work:
Unit cost comparison
Measures of efficiency

9. VFM Analytical Framework

10. Options for VFM

11. Conclusions
Still early days – don’t panic!
Be proportionate / use common sense
Do engage