Achieving value for money (Part 2)

We looked in the first article of this two part series at the theory behind value for money. In this final part, we look at how we can achieve value for money in our activities in the real world and I provide some useful tips from my experience of working with organisations across the public and not-for-profit sectors.

When we looked at the theory, we identified the three E’s – economy, efficiency and effectiveness. These are like links in the value for money ‘chain’, in that we need to pay attention to each of them if the chain is to remain strong. So let’s look at each of these in turn, starting with the last one (I’ll explain why in a second).

Effectiveness

Effectiveness is about achieving our desired outcomes. To do this, we need to have a clear understanding of what these desired outcomes are, because they will dictate the rest of what we do and how we do it. This is why we are looking at effectiveness first.

We also need to know what specific outputs (things that we create, develop or organise) will lead to our desired outcomes. We may have this information already, but we may need to look at academic or practitioner research or to do small-scale pilots to find out what works and what does not. We need to be able to demonstrate that we are doing the right things, not just that we are doing them right.

One we get our activities under way, it is important that we monitor how well we are doing. This is not just a matter of measuring the number of each output that we have delivered, but is also about measuring our performance in achieving our desired outcomes. Saying ‘We delivered 25 stop-smoking seminars in 2011’ is OK. Saying ‘We helped 312 people to stop smoking in 2011 and reduced the overall smoking rate amongst adults and young people in Bristol from 22% to 18%’ is brilliant. Also, funders will love it.

Efficiency

Efficiency is about how well we translate inputs into outputs. To do this well, we need to plan our activities and to think about what we will need to deliver them. Just as booking a flight gets more expensive the later we leave it, it becomes more difficult to work efficiently if we have to do things in a hurry because we have forgotten something or because things get a bit out of control.

It is also important to think carefully about how we do things, particularly things that we do on a regular basis. Take an advice centre, for example. A client comes in for his appointment and the caseworker goes to get the client’s file from upstairs before joining him in the interview room next to reception. This only takes a few minutes, but what if the caseworker were to collect all of the day’s files first thing in the morning and leave them at reception. Not a major change – but it could free up enough of the caseworker’s time for another couple of interviews over the course of the day.

To improve value for money, we can identify the main processes – or activities – that we use for converting inputs to outputs and develop ways of measuring their efficiency. In the example above, this could be things like ‘number of clients seen per day’ or ‘proportion of time spent directly with clients’. In other organisations, measures of efficiency could include ‘time taken to organise one seminar’, ‘number of helpline calls responded to’ or ‘number of units produced per person per day’. The key is that by identifying measures like these, we can try different ways of doing things and can see directly whether or not they help us to operate more efficiently.

Economy

Economy is about the cost of the inputs that we use. The easiest way to improve the economy of our activities is to minimise the amount of resources that we use. This means thinking carefully about inputs and identifying things that we could do without or do differently. Do we really need cakes and biscuits in meetings, for example, or would fresh fruit be a cheaper (and healthier!) alternative? And can we put our monthly newsletter online rather than sending out paper copies in the post?

We can also make sure that we minimise the cost of the inputs that we use. For example, are we getting the best deal on stationery, room hire and the many other things that we use? Getting quotes from a number of suppliers will help us to see if we could get things cheaper somewhere else. We can even talk to people in other organisations to find out what they pay and who their suppliers are. Or we could speak to our existing suppliers to see if they can offer us some form of discount.

It is not just about cost, though – quality is also important. It is no point getting something cheaply if it does not do what we need it to. So we should ensure that anything we buy is of a suitable quality. The opposite is also true, though. We do not need to buy things that do more (and cost more) than we need them to. If we need a laptop computer, for example, does it need to be the latest widescreen version with all the latest features, or would one of last year’s smaller models from the ‘clearance’ section do the job just as well?

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