by Guest Blogger – Alex Normandale
In 1890, Oscar Wilde, in his novel ‘The Picture of Dorian Gray’, remarked that ‘Nowadays people know the price of everything and the value of nothing.’ This statement is as true now as it was back in July 1890. But in the context of government organisations, achieving value for money is easier said than done.
A democratically elected government exists to facilitate the operation of society as we, its citizens and voters, propose. This requires two main elements: a framework/agenda set by the voters for society and the knowledge and practical skillset to deliver the outcomes this framework requires through a cost effective utilisation of available resources. It is the latter, which poses the difficulty for government.
For government organisations to achieve value for money outcomes they must put in place procurement practices that drive the efficient utilisation of resources to generate the most efficient and effective performance against the required objectives. In simpler and broader terms, value for money is where the required benefits (including quality levels, performance standards, and other policy objectives – such as social and environmental impacts) are balanced against the cost (price and risk exposure) of achieving those benefits. Value for money goes far beyond being cost and budget sensitive, rather it considers key attributes such as: constraints; transparency and equity; compliance; innovation; balancing risk and reward; sustainability; health of your local suppliers and service providers; whole of life of the asset or service; and quality. All of these considerations ensure that the community receives the right outcome for the lowest price – value for money at its simplest.
To drive value for money outcomes within your project you must put in place a Value for Money Framework, which answers four fundamental questions: what do we do well? (Key Result Areas); how will we know? (Key Performance Indicators); how are we doing? (Measurement); and what can we do better? (Action/Evaluation). Government organisations and service providers’ must then work together to ensure their mutual interests are aligned and a relationship of trust, collaboration and understanding is established from the very beginning.
Achieving value for money outcomes for the community is one of the fundamental responsibilities of government organisations. To facilitate the running of our society we pay taxes and in return we expect and trust our government to invest our money prudently. I hope this brings some much needed clarity to what is a difficult and often controversial, but yet vitally important, topic for government leaders and their stakeholders.