ActionAid Value for Money Pilot Update

1. ActionAid Value for Money Pilot Update May 2012

2. Origins of the VFM Pilot • Measuring cost effectiveness approved in September 2010 as part of the new Global M&E System Requirements. Will become core component of monitoring of all ActionAid programmes from 2013. • Original Aim of Pilot - define cost effectiveness in the ActionAid context as well as test appropriate methodologies and create recommendations for wider implementation.

3. In the Beginning… Cost effectiveness defined as an analysis of the relationship between effectiveness and costs (or inputs) As a charitably funded organisation we know and can show that we are achieving maximum results for reasonable cost Being able to demonstrate cost effectiveness in a way that upholds our mission and values should enable us to build a case that we represent value for money

4. Ripping Up and Starting Over BOND VFM Group helped us debate: • What about Value for Money? Who decides Value? • What about cost efficiency? • How do we understand and apply within our accountability system (ALPS)? Cost Effectiveness Pilot becomes the Value for Money Pilot

5. Agreed Definitions Cost efficiency: Maximising the output with a given level of inputs (this could include financial and economic costs, such as volunteer time). Cost effectiveness: Ensuring that you achieve your intended objective/outcomewith optimal use of resources. Need to specify outcomesand link M&E framework to financial and economic costs.

6. Agreed Definitions Value for Money (VFM): • Umbrella term, looks at how to manage costs, improve efficiency, and how to demonstrate that what we are doing is the right thing to do • ‘Value’ viewed in terms of what stakeholders, most notably rightsholders, value in terms of what we have promised to deliver – thereby ensuring accountability towards rightsholdersas well as donors/public • VFM is about building and presenting a case

8. Application – Cost Efficiency

9. Application – Cost Effectiveness

10. Plan for Integration Include Key Questions in: • HRBA 2.0 – Programme Framework Guidance • Global Monitoring Framework • Revised ALPS • Evaluation TORs Ensure Key Questions are addressed – compliance Build capacity and cross-check systems

11. What about Assessing Value for Money? Assessment methodologies and processes: • Need to build on existing organisational participatory approaches • Evidence-based, rigorous • Aligned with mission and values • Help to prove ‘Theory of Change’ • Not just assessing traditional programmes But how? And with whom?

12. Partnership with the New Economics Foundation • Agree a common understanding and definition of Value for Money as it applies to ActionAid • Understand and be able to test methods for measuring cost effectiveness and cost efficiency, using tools adapted for ActionAid • Understand how to create a narrative using the results that would build the VFM case • Understand how to engage stakeholders in the assessment process – thus giving us the ultimate VFM

13. Tools for Assessment • Social Return on Investment (SROI): Cost effectiveness methodology that contrasts outcomes with full economic costs, incorporating externalities for all material stakeholders and using participatory approaches • Adapted SROI: analysing economic costs against outcomes. Not creating ratio but creating a narrative. Include existing data • Cost Efficiency Analysis (CEA): Measurement of outputs relative to costs • Cost Effectiveness Analysis: Measurement of single outcome relative to costs • Adapted Cost Effectiveness Analysis: Measurement of outcomes relative to costs. Creating a narrative. • Multi-criteria Analysis (MCA): A (participatory) decision making approach designed to quantify and assign weighting to competing values and criteria of different stakeholders when considering different courses of action

14. Adapted SROI Template Adapted SROI – analysing full costs against benefits. Not creating ratio but creating a narrative. • COST BREAKDOWN • Financial costs • Economic costs • ELABORATION OF BENEFITS (IMPACTS) • Key outcomes • Tangible • Intangible • An estimation of outcome incidence • Deadweight • Attribution • Displacement • External/indirect impacts • Benefit period

15. Pilot Testing Through December 2012