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The economic situation following the COVID-crisis has exacerbated budgetary pressures which are, along with public demand to demonstrate ‘value’ of public expenditure, often recognised as the main rationales for the current trend towards outcomes-based contract (OBCs) and Impact Bonds (IBs). In OBCs, the outcome payer contracts-out services and directly links payment to the contractor’s success in meeting targets for pre-defined outcomes – the positive results that services produce in the lives of service users and citizens – rather than the volume or quality of outputs. This mechanism is believed to allow greater flexibility around certain service activities and consequently to promote innovation and effectiveness. However, this necessitates building new capabilities and tools, as there are no bespoke guidelines and toolkits designed to take advantage of the synergies between the work needed to set up outcome-oriented programmes and the assessment of Value for Money (VfM).

To address this, we have partnered with Chartered Institute of Public Finance and Accountancy (CIPFA) on a project to develop a toolkit based on the UK’s National Audit Office standard definition of VfM. This project is aimed at public managers planning to assess VfM of OBC programmes, or any public programme with an outcome-focus, using prospective information.

VfM Toolkit

VfM Toolkit case study

How to use the VfM toolkit

As well as downloading the populated case study to get an example of the toolkit in practice, we encourage you to read the VfM toolkit accompanying guide and watch our two video tutorials below.

Walking through the GO Lab/ CIPFA Value-for-Money (VfM) Toolkit
Quantitative Calculator: the GO Lab/ CIPFA Value-for-Money (VfM) Toolkit

Helping to make more informed choices

This toolkit will:

  • Provide a framework for thinking and learning about the economic validity of public programmes with a special focus on OBCs.
  • Provide a self-assessment instrument for testing expectations.
  • Promote thinking about longer-term effects of interventions, such as outcomes and impact, at the design/planning stage of programmes.

This toolkit will not:

  • Provide a comprehensive stand-alone source for decision making, as there are many other factors apart from economic validity.
  • Provide a framework to support the choice of service delivery model (i.e., sourcing strategy). The delivery model assessment, which used to be known as make vs buy, is part of another framework that we are planning to develop in the future. The UK Government’s Sourcing Playbook also provides some guidance on that.

The project team

This project was funded by the Engagement Fellowship grant from the University of Oxford’s Higher Education Innovation Fund (HEIF). The project team consisted of Dr Mehdi Shiva, Jeffrey Matsu, Chevano Baker, Ruby Dickson, and Dr Mara Airoldi. The project team are grateful to the experts who participated in the roundtable on 1st July 2021. We are especially thankful to Neil Stanworth, Nicola Lycett, Bilal Dunoo, Janice Hadfield, and Janet Bowlzer for utilising the toolkit with real data and sharing their experience and feedback. The project team also appreciate all the help and support from both the GO Lab and CIPFA teams.

Peer learning group

If you are interested in learning more about VfM analysis or would like to discuss and explore ways to improve value creation of public expenditure, please join our Value in Public Finance peer learning group. The peer learning group is a community of individuals and organisations interested in improving public finance and how economies perform. The group meets quarterly and is co-organised by the GO Lab and CIPFA. Click here to find out more.

Contact us

Both the guide and the toolkit are in beta version and open for public comment. We welcome your feedback. Please email GO Lab's Economist Mehdi Shiva or with queries or comments.