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Value Of Value For Money

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INTRODUCTION

Value for Money is the utility derived from every purchase or every sum of money which is spent. It is not only based on minimum purchase price but together with efficiency and effectiveness of purchase.
The concept of value for money includes both qualitative and quantitative aspects. In addition, it typically involves an element of judgment on the part of a government. There is no precise indicator to measure value for money. Value for money can broadly be defined as what a government judges to be an optimal combination of quantity, quality, features and price (i.e. cost), expected (sometimes, but not always, calculated) over the whole of the project’s lifetime.
There are 3 elements for Value for Money:
• Economy in the use of resources so as to maximize inputs per dollar, euro, pound, yen, etc.
• Efficiency to maximize outputs per input.
• Effectiveness to maximize outcomes per output.

Qualitative VFM analysis typically involves sense-checking the rationale for using PPP—that is, asking whether a proposed project is of a type likely to be suitable for private financing. This often takes place at a relatively early stage of PPP development.
Quantitative VFM analysis involves comparing the value for money of a proposed PPP (or actual bids received) with a “Public Sector Comparator” (PSC)—that is, a model of the project if implemented through traditional public procurement.

TIMING AND ROLE OF VFM ANALYSIS
VFM analysis is used to carry out all public

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