Question

Scholars posit that the value for money (VfM) concept offers a broader way of measuring government performance and guiding policy decisions (see e.g., Kelly et al., 2002). Explain and apply the relevant element (s) of value for money as an assessment tool to the following case, providing explanations for your answer:
The Accra Metropolitan Assembly decided to set up a new programme to reduce litter dropping. As part of the process, the Assembly had to agree with stakeholders on a set of outcomes for the programme which will be used as the basis for measuring the effectiveness of the programme in a year. Three proposals with respect to the cost of resources required were received:
Proposal 1 Proposal 2 Proposal 3
GHC 20million GHC 25million GHC 23million

Proposal 3 was however used to budget for the programme and managers of the programme are allowed cost over-run in their drive to meet the outcome. During the first year of the programmes it was observed that the programme achieved 95% of its outcomes and officials of the Assembly declared a victory against litter. Similar programmes in the Tema Metropolitan Assembly produce the same outcome; however, the cost of these programmes are relatively lesser. Also, the most disadvantaged parts of the Accra Metropolitan Assembly were those with the biggest litter problems and these neighbourhoods improved more, from a lower base, than wealthier places.

Answer 1

Answer:

Value for Money concept is an evaluation technique for measuring performance, especially governmental programmes and activities.  The concept has four elements: economy, effectiveness, efficiency, and equity.

In this case study, all these elements of value for money can be used to evaluate the outcomes of the Accra Litter Dropping programme.

Economy:  The new programme to reduce litter dropping will achieve economy if the monetary cost of resources does not exceed the budget.  If the managers over-run the budget of GHC 23million, in their drive to reduce litter dropping, we can say that the programme was not economical.  A more economical programme will cost GHC 23million or less.

Effectiveness:  This value for money element talks about the benefits of the programme.  Effectiveness judgement is made between the intended outcome and the actual outcome.  Since the outcome was agreed upon initially, this agreed outcome becomes the intended outcome or expected result.  At the end of the year, the actual benefits are computed to compare with the intended benefits.  Only 95% of the outcomes were achieved.  The figure is relatively high, therefore, the Assembly can claim to have delivered on effectiveness.

Efficiency: This element discusses the output from the programme in relation to the input, and its quality and sustainability in comparison with similar programmes elsewhere.  One can say that the output was not commensurate with the input of resources, because managers were allowed to spend more than the output they produced.  Even the Tema Metropolitan Assembly produced the same outcome using lesser resources.

Equity:  Another important element to consider in assessing this programme is equity.  The programme seems to be equally available to all stakeholders since most efforts were concentrated in areas with the biggest litter problems.  These areas also improved from their lower base than wealthier places.  The programme is very equitable on this basis.

Explanation:

Value for Money is a tool for assessing governmental spending.  Government is not a profit-making organization.  It exists to render social services.  Therefore, profit cannot be used as a basis for the evaluation of its spending performance.   A more suitable assessment tool is the value for money concept.