Question

Explain the concept of value-for-money, describing the problems which may arise in applying the VFM model and suggest how the problems might be overcome.

Answer 1

Value for money is derived from each purchase or each sum of money spent. It is not only based on the minimum purchase price,but also the maximum effectiveness or efficiency from the purchase.

Limitations of it

It completely relies on reliable data and statistics.

It needs harmonizing method and tools,which varies from.one palce to another.

Risk associated with its utilisation is high as it is difficult to compare between public sector comparator(psc) and public private partnership(ppp)

Typical ppp project takes 15 to 30 years. But the estimation of associated vfm for that made at the time of developing psc and it's comparison with ppp bids. But in real life such estimates in vfm may differ,what is made in psc

Overcome of limitation

Limitations can overcome

If you collect reliable data and statistics.

You should prepare a good guidelines for implementing it.

Maintain a harmonization of method