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Action. Aid Value for Money Pilot Update May 2012
Origins of the VFM Pilot - Measuring cost effectiveness approved in September 2010 as part of the new Global M&E System Requirements. Will become core component of monitoring of all Action. Aid programmes from 2013. - Original Aim of Pilot - define cost effectiveness in the Action. Aid context as well as test appropriate methodologies and create recommendations for wider implementation.
In the Beginning… Cost effectiveness defined as an analysis of the relationship between effectiveness and costs (or inputs) As a charitably funded organisation we know and can show that we are achieving maximum results for reasonable cost Being able to demonstrate cost effectiveness in a way that upholds our mission and values should enable us to build a case that we represent value for money
Ripping Up and Starting Over BOND VFM Group helped us debate: - What about Value for Money? Who decides Value? - What about cost efficiency? - How do we understand apply within our accountability system (ALPS)? Cost Effectiveness Pilot becomes the Value for Money Pilot
Agreed Definitions Cost efficiency: Maximising the output with a given level of inputs (this could include financial and economic costs, such as volunteer time). Cost effectiveness: Ensuring that you achieve your intended objective/outcome with optimal use of resources. Need to specify outcomes and link M&E framework to financial and economic costs.
Agreed Definitions Value for Money (VFM): - Umbrella term, looks at how to manage costs, improve efficiency, and how to demonstrate that we are doing is the right thing to do - ‘Value’ viewed in terms of what stakeholders, most notably rightsholders, value in terms of what we have promised to deliver – thereby ensuring accountability towards rightsholders as well as donors/public - VFM is about building and presenting a case
Application – Cost Efficiency
Application – Cost Effectiveness
Plan for Integration Include Key Questions in: • HRBA 2. 0 – Programme Framework Guidance • Global Monitoring Framework • Revised ALPS • Evaluation TORs Ensure Key Questions are addressed – compliance Build capacity and cross-check systems
What about Assessing Value for Money? Assessment methodologies and processes: - Need to build on existing organisational participatory approaches - Evidence-based, rigorous - Aligned with mission and values - Help to prove ‘Theory of Change’ - Not just assessing traditional programmes But how? And with whom?
Partnership with the New Economics Foundation - Agree a common understanding and definition of Value for Money as it applies to Action. Aid - Understand be able to test methods for measuring cost effectiveness and cost efficiency, using tools adapted for Action. Aid - Understand how to create a narrative using the results that would build the VFM case - Understand how to engage stakeholders in the assessment process – thus giving us the ultimate VFM
Tools for Assessment - Social Return on Investment (SROI): Cost effectiveness methodology that contrasts outcomes with full economic costs, incorporating externalities for all material stakeholders and using participatory approaches - Adapted SROI: analysing economic costs against outcomes. Not creating ratio but creating a narrative. Include existing data - Cost Efficiency Analysis (CEA): Measurement of outputs relative to costs - Cost Effectiveness Analysis: Measurement of single outcome relative to costs - Adapted Cost Effectiveness Analysis: Measurement of outcomes relative to costs. Creating a narrative. - Multi-criteria Analysis (MCA): A (participatory) decision making approach designed to quantify and assign weighting to competing values and criteria of different stakeholders when considering different courses of action
Adapted SROI Template Adapted SROI – analysing full costs against benefits. Not creating ratio but creating a narrative. - COST BREAKDOWN - Financial costs - Economic costs - ELABORATION OF BENEFITS (IMPACTS) - Key outcomes - Tangible - Intangible - An estimation of outcome incidence - Deadweight - Attribution - Displacement - External/indirect impacts - Benefit period
Pilot Testing Through December 2012 Country Vf. M methodology MCA light MCA plus Australia SROI Australia/UK UK Cost effectiveness light or cost efficiency SROI light Work stream Policy scenarios in strategy Productive resources (Agri+land) (via Kenya/Uganda) Campaigns (tax justice) Schools, education, youth Undetermined (within strategy and existing M&E framework) General M&E framework Nigeria Costs SROI light Template report (VFM programme cycle) SROI light Ethiopia SROI Afghanistan SROI Cost-effectiveness light or cost efficiency LRP (empowerment) ? (project with quality quantitative data) Women’s rights/advocacy Existing emergency evaluation Estimating economic costs Finance - general Denmark International secretariat Pakistan AAI Finance, Regional office, Thailand Across the board