ActionAid 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 ActionAid programmes from 2013.

- Original Aim of Pilot - define cost effectiveness in the ActionAid 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 and 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 DefinitionsValue for Money (VFM):

- Umbrella term, looks at how to manage costs, improve efficiency, and how to demonstrate that what 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

Value for Money in Programme flow

Appraisal &

Strategic

Planning

Inputs & resources

(costs)

Activities & outputs Outcomes Impact

Implementation Implementation & monitoring

Review/EvaluationAppraisal,

programme development,

baseline

ALP

S pr

oce

ss

Managing CE Improving CE Demonstrating CE

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 ActionAid

- Understand and be able to test methods for measuring cost effectiveness and cost efficiency, using tools adapted for ActionAid

- 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

Pilot Testing Through December 2012Country VfM methodology Work stream

Australia

MCA light Policy scenarios in strategyMCA plus

SROIProductive resources

(Agri+land) (via Kenya/Uganda)

Australia/UKCost effectiveness light or cost

efficiencyCampaigns (tax justice)

UK

SROI Schools, education, youth

SROI lightUndetermined (within

strategy and existing M&E framework)

DenmarkCosts General

SROI light M&E framework

International secretariatTemplate report (VFM

programme cycle)Across the board

Nigeria SROI light LRP (empowerment)

Ethiopia SROI? (project with quality

quantitative data)

Afghanistan SROI Women’s rights/advocacy

PakistanCost-effectiveness light or cost

efficiencyExisting emergency

evaluation

AAI Finance, Regional office, Thailand

Estimating economic costs Finance - general