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

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

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

‘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

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?

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!

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

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

VFM Analytical Framework

Options for VFM

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