VFM

Value for money (VFM) is a performance concept used to assess whether scarce resources are used efficiently to achieve intended outcomes. In public policy and procurement contexts, VFM is about obtaining the best possible combination of cost, quality, and usefulness given the objectives and constraints of a project or program.

VFM has been institutionalized in government and public-sector practice, particularly in the United Kingdom and other countries that emphasize accountable spending. It is often defined as obtaining the optimum balance of cost, quality, and service delivery so that public objectives are met without unnecessary expenditure. The concept is applied across planning, procurement, program evaluation, and audit processes to justify decisions and improve performance.

A common framework for VFM uses three core criteria: economy, efficiency, and effectiveness. Economy focuses on minimizing input costs and obtaining basic resources at the lowest possible price. Efficiency assesses how well inputs are transformed into outputs, seeking to maximize output per unit of input. Effectiveness measures the extent to which outputs achieve the desired outcomes and benefits for users or stakeholders. Some frameworks also consider timeliness, sustainability, and equity as supplementary dimensions.

Methods commonly used to evaluate VFM include cost-benefit analysis, lifecycle costing, value-for-money audits, performance indicators, benchmarking, and risk-adjusted assessments. These tools help compare alternatives, quantify trade-offs, and identify opportunities to improve value.

Critics note that VFM assessment can be subjective, data-intensive, and sensitive to assumptions about future benefits. The focus on cost savings must be balanced with considerations of quality, long-term impact, and social value.