Annex 9 Vfm Principles.docx

Annex 9

Value for Money Principles 1. Basic Principles Value for Money (VfM) is about maximizing the impact of every money spent to improve people’s lives. VfM does not mean to do the cheapest things. It is understood that the hardest to reach people and places that need peacebuilding support could cost more and the DCPSF will supports such interventions. The important thing is to get better understanding of what the main drivers of costs are and how to get the desired quality at the lowest price. 2. How to Measure: Using 3Es To maximize the impact of the DCPSF projects and monitor VfM, information about the specificity of results (activity results, outputs and purpose), assumptions and the costs to deliver the results are critical. Therefore, in measuring VfM, the 3 E framework–economy, efficiency, effectiveness and cost-effectiveness-- is considered as criterion and it is important to show evidence of maximizing 3Es in achieving the results in the proposals.

In developing your projects, please include evidence to support the following points of 3Es. The following is to have a common understanding of what 3Es mean. A few examples to measure each E are also included. However, these are just indicative and an important thing is that your proposal indicates what and how the project measure VfM by specifying results, assumption and inputs (inputs include staff, consultants, raw materials and capital used to produce inputs). (a) Economy Are we buying inputs of appropriate quality at the right price? What are the main drivers of costs? How do you plan to manage such costs? In order to review those points, in the budget, we need unit cost of inputs to deliver results. For example, developing a water committee by providing a water pump, inputs will be broken-down into the cost of material costs, personnel cost, contracted workers, training of the water committee etc. VfM is not about looking for cutting costs. Therefore, it is important to clearly specify the results that justify the costs. For example, you may need a specific training or workshop only for women to meet their particular needs or/and respond to cultural sensitivity. It may increase inputs but can be justified by clearly stating the results as well as assumptions. Also, you may need to take any special arrangement to secure access to the project site

when you plan to reach the hardest point. Then, it is important again to justify and provide evidence of such costs and how you manage them vis-à-vis the results you deliver and based on the assumption. The following are examples for measuring economy aspects in your proposal:  Local inputs (national staff, national consultants, goods and services procured nationally) /international inputs (international staff, international consultants, goods and services procured internationally)  Supporting costs/ total budget (b) Efficiency How well do we convert inputs into outputs? Are we developing capacity from the scratch or are we building on what they already have? Is there commitment and ownership from the local counterparts on the results we want to deliver? One of the ways to measure efficiency would be to monitor the cost spent for delivering the results. For example, output 1 is to make community-level conflict resolution and prevention platforms in place and effective and how much cost is planned to deliver such platforms in place and for them to function effectively. (c) Effectiveness How well are the outputs from an intervention are achieving the desired outcome on peacebuilding? For measuring effectiveness, the revised DCPSF results framework included indicators for the purpose level and results of outputs, e.g. indicator 1.3 Number of cases submitted and resolved by the conflict resolution and prevention platforms. It is important to indicate in your proposals how well your project is achieving the outcomes and performance of deliverables, i.e. target of the number of cases that the conflict resolution mechanisms solve (DCPSF indicator 1.3), target number of collaborative income generation opportunities (DCPSF indicator 2.1) and how you monitor them. (d) Cost-Effectiveness How much impact on stability and peaceful co-existence between communities does an intervention achieve relative to the inputs that are invested in it? While the DCPSF at the fund level monitors how much impact the DCPSF projects deliver on the overall with the allocated funding, it is useful to see costs per output from each of the project as is explained above under (b) efficiency.