Question

Scholars posit that the value for money (VfM) concept offers a broader way of measuring government performance and guiding policy decisions (see e.g., Kelly et al., 2002). Explain and apply the relevant element (s) of value for money as an assessment tool to the following case, providing explanations for your answer:

The Accra Metropolitan Assembly decided to set up a new programme to reduce litter dropping. As part of the process, the Assembly had to agree with stakeholders on a set of outcomes for the programme which will be used as the basis for measuring the effectiveness of the programme in a year. Three proposals with respect to the cost of resources required were received:

Proposal 1 Proposal 2 Proposal 3 GHC 20million GHC 25million GHC 23million respectively.

Proposal 3 was however used to budget for the programme and managers of the programme are allowed cost over-run in their drive to meet the outcome. During the first year of the programmes it was observed that the programme achieved 95% of its outcomes and officials of the Assembly declared a victory against litter. Similar programmes in the Tema Metropolitan Assembly produce the same outcome; however, the cost of these programmes are relatively lesser. Also, the most disadvantaged parts of the Accra Metropolitan Assembly were those with the biggest litter problems and these neighbourhoods improved more, from a lower base, than wealthier places.

Answer 1

Value for Money (VfM) generally defined as the most advantageous combination of cost, quality and sustainability to meet customer requirements. In this context of program developed by The Accra Metropolitan Assembly, quality means meeting a specification of the program of reducing litter program at best possible cost.

Relevant element for the Value for Money (VfM) observed in the case is as follows:

1) The proposal selected by The Accra Metropolitan Assembly was L2 (i.e. GHC 23 million) instead of L1 (i.e. GHC 20 million). If the approach and expectation of the The Accra Metropolitan Assembly was already defined and communicated to all the vendors, there is no point selecting L2 assuming all the vendors are determinant to provide the same level of service quality and delivery. The Accra Metropolitan Assembly should have selected L1 vendor's proposal i.e. GHC 20 milllion.

2) It is ideal situation where The Accra Metropolitan Assembly should have approached other Metropolitan Assembly to understand and benchmark approach and methods selected by them to reduce litter problem. The consideration and cost would have helped The Accra Metropolitan Assembly in identifying the right proposal methodology and achieve an outcome at best possible cost.

3) Centralization is one of the many other approach where many other Metropolitan Assembly comes together for a common cause and together address the issue. Centrally obtaining the proposal and selection of vendor basis the economies of scale could have helped negotiate better cost for the execution of program for reducing litter problem.

4) The Accra Metropolitan Assembly should have further negotiated cost of proposal amongst these vendors to get the same quality of output at reduced cost. The Accra Metropolitan Assembly has given authority to the managers to go cost over-run was a mistake and should not have been allowed at first place. The Accra Metropolitan Assembly should have defined a budget for the implementation of the program to reduce the litter problem and should have asked manager to execute the same within the budget. This is called as control costing and asking for justification for any variation.