Getting Value for Money

It has been ten years since the Department of Finance issued its Value for Money (VFM) Guidance Manual.^[i] Five years on, the Department of Public Expenditure and Reform updated guidance for VFMs in its Public Spending Code.^[ii]  The latter guidance manual has included a number of new requirements. But the objectives remain the same, namely

“… to analyse Exchequer spending in a systematic manner and to provide a basis on which more informed decisions can be made on priorities within and between programmes”.^[iii]

 

Doing VFMs

The guidance manuals are straightforward in guiding Departments and Offices doing VFMs. In essence, it is a matter of answering a series of questions, including:

• What is the rationale and the objectives for the scheme?
• Are the objectives still relevant, in light of evolving policy priorities?
• Has the scheme achieved its objectives?
• How efficiently has the scheme been delivered?
• How does the scheme rate against alternative ways of achieving the same objectives?

 

Of course, it is one thing to ask questions, it is another matter to generate meaningful answers. Departments and Offices undertaking VFMs put in place steering committees and evaluators who undertake the necessary work, under agreed terms of reference. The two guidance manuals help to shape the work, but considerable time and resources have to be devoted to each review, in order to produce reports containing meaningful conclusions and working recommendations.

 

The key framework model for carrying-out VFMs is called the “Programme Logic Model” — sometimes referred to as the “Input-Output Model”. The model maps out the shape and logical linkages of a programme. It provides a systematic and visual way to present the cause-and-effect relationships between inputs, activities, outputs and outcomes. This model is used in the planning, implementation, monitoring and evaluation of public expenditure programmes. It is, however, only a framework. The real work comes when Public Sector officials sit down to assemble data and information on the inputs and outputs of their public expenditure programmes – see Figure 1.

 

 

In July 2015, the Government agreed the current round of reviews and assessments covering the years 2015 to 2017. The programme of work was agreed. The status of over 40 reviews is accessible from the Irish Government Economic and Evaluation Service’s tracker.^[iv]

 

Focused Policy Assessments and Balance Scorecard

The Department of Public Expenditure and Reform has retained the main features of the 2007 VFM guidance manual when it updated the guidance in its Public Spending Code in 2012. It is worth mentioning two additions that were made: the introduction of Focused Policy Assessments, and of the Balanced Scorecard. With regard to Focused Policy Assessments, they were introduced as a means of providing sharper and more narrowly-focused assessments than VFMs. They focus on answering specific issues of policy configuration and delivery. The intention is to get quicker turnaround on assessments, to have high standards of quality, with specific timelines and specific policy questions, using the expertise of trained evaluators from within Departments and the services of the Central Expenditure Evaluation Unit of the Department of Public Expenditure and Reform.

 

The introduction of the Balance Scorecard arose from criticism that VFM reviews had been undertaken in a way that made it hard for policy-makers to form a common view of how particular programmes rate, relative to other programmes. That led to the requirement that reviews include a standard report – a “balanced scorecard” – based upon a number of important criteria that are common to all evaluations. These are set-out in Section C-03 of the Public Spending Code^[v].

 

A “traffic light” system was introduced in the Balanced Scorecard to provide a rating of expenditure programmes. Such ratings can help policy-makers, Oireachtas Committees, and the general public scrutinise the cost-effectiveness of spending. The traffic light system is as follows:

• High Score (Green light) – the programme is well-specified, achieving its objectives, and cost-effective in general terms.
• Intermediate Score (Amber light) – the programme scores highly in some areas, poorly in others: scheme re-design or efficiency improvements must be considered.
• Low Score (Red light) – poor evidence of delivery of objectives; scheme funding should be available for reallocation to other priority areas.

 

Learn more about VFMs

PAI are running a half-day seminar on Value-for-Money Reviews on Monday 13 November 2017.

 

This seminar will allow those attending to learn about the key requirements for both the VFMs and the FPAs be updated on developments. Other matters that will be addressed include:

• The rationale and objectives for VFMs and FPAs;
• Challenges being faced in undertaking VFMs and FPAs;
• Lessons to be learned from completed VFMS and FPAs,:
• Doing a simple VFM Review, and
• How to use the official guidelines to best effect.

For more information, or to book, click here.

 

Notes

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^[i] Public Spending Code VFM Manual, available here.

^[ii] Public Spending Code website, available here.

^[iii] VFM Manual, page 4, available here.

^[iv] Irish Government Economic and Evaluation Service VFM Review Initiative, available here.

^[v] The Public Spending Code: C. Implementation and Post-Implementation; Reviewing and Assessing Expenditure Programmes. Available here.