DELIVERING

VALUE FOR MONEY Produced by Virtual College @elearning_UK

CONTENTS Intro

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VfM as a Business Driver

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Value for Money

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Who is responsible for VFM?

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The Three E’s

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VfM relates to all areas of an organisation

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Best Practice: Championship League

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Developing a viable VfM Strategy

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The VfM Toolbox

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Resources and Contact Us

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The Three S’s

4

Best Practice: Policing

5

Outlining the Philosophy of VfM

6

Delivering Value for Money

INTRO Delivering Value for Money

This e-Book is an introduction to the principles of value for money (VfM), including examples of how it should be applied to organisations. In the current financial climate it is important to strive for value for money. Decisions about VfM are a daily reality in all of our lives.

We are constantly choosing which items or services to buy, and judging the right balance for us between quality and cost. We are generally aware of how our personal value for money decisions affect us but it’s not as easy when judging value for money for an entire organisation. 1

VALUE FOR MONEY •

Builds on existing good practice, with the key objective of improving organisational efficiency and effectiveness.



Promotes an open and transparent culture within the organisation, demonstrating best use of resources to customers and other stakeholders.



Encourages the optimum use of resources and should generate capacity which can be reinvested into new or improved services and products, making the organisation stronger for the future and ensuring long-term viability.

Delivering Value for Money 2

THE THREE E’s

This is Vince. He has taken time out from our course ‘Value for Money’ to give us some tips.

VfM is the term used to assess whether or not an organisation has obtained the maximum benefit from available resources, for goods and services it acquires and or provides.

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THE THREE S’s VfM is a strategy aimed at balancing cost and quality by either doing the same for less or more for the same. Achieving the right local balance will create an environment within which an organisation is able to assess whether they are: • • •

Spending less Spending well Spending wisely

Only when an organisation can effectively track all expenditure, can a value for money strategy be implemented. Delivering Value for Money 4

BEST PRACTICE: POLICING One police force used criteria of threat, harm and risk assessment to set priorities and find savings. Their approach aligned the budget with strategic risks. Following its decision to set violent crime as a high priority, the force reduced local levels of violent crime from 18.34 cases per 1,000 people in year 1 to 16.21 in year 3. The force benchmarked its progress against 7 peer group forces and found that it had made the most progress over three years in reducing violent crime. They also identified specific issues as low priorities, such as roads policing. Money removed from this low priority area resulted in a saving of £3 million, which was then invested in addressing high priority issues. As part of risk management, the force holds annual force-wide strategic risk seminars with peers, partners and national agencies. The seminars enable the force to continually review its value for money strategy by confirming the key risks to address when aligning future budgets.

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OUTLINING THE PHILOSOPHY OF VFM Although low cost and high quality services represent the optimum value for money, it may not always be possible or desirable to achieve this and customers may be satisfied by medium cost, high quality services or low cost, medium quality services. Low cost or buying the cheapest product or service, may not always be appropriate. VfM is also about taking into account the whole life cost and wider factors such as social considerations - providing a service which people actually value. There is sometimes a time-lapse between investment and improvement of quality and service where value for money cannot be measured until time has passed. Delivering Value for Money 6

VFM AS A BUSINESS DRIVER

In practice, VfM can be a source of competitive advantage amongst peers and can be a unique selling point, which is difficult for others to replicate. Achieving VfM in an organisation should ensure:



Customer satisfaction Involving customers in issues of priority and service standards, for example, ensures that the organisation attains customer satisfaction as the customer is then provided with the product they wanted. Employee satisfaction Employee satisfaction is attained by encouraging employee involvement, i.e. ensuring that employees feel well respected, take ownership for their responsibilities and work to the organisation’s objectives. Profitability Selling the product at the right price and quality enables the business to operate at a profit and therefore reinvest in future or on-going projects. How to Create Effective E-learning Delivering Value for Money 7

WHO IS RESPONSIBLE FOR VFM?

The starting point for devising a VfM strategy is the board of directors. The board will determine broad overall high-level objectives designed to provide managers with a general frame of reference for organisational activity.

Once this strategy has been devised, remember that everyone has a part to play in VfM!

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REMEMBER - The board is ultimately responsible for scrutinising performance and ensuring that VfM is achieved in respect of all activities undertaken. Executive teams set up by the board then have a responsibility to ensure VfM is delivered.

VFM RELATES TO ALL AREAS OF AN ORGANISATION VfM should be embedded throughout an organisation. Often, demands on an organisation’s services are constantly increasing, yet resources are limited. The economic climate, coupled with rising customer expectations and the growth of customer needs, underlines pressure on organisations and the need to achieve a viable VfM strategy. You may already have an effective VfM strategy in place, however it is best practice to continually review and evaluate performance in order to strive for business improvement.

Delivering Value for Money 9

BEST PRACTICE: CHAMPIONSHIP LEAGUE To assist in achieving value for money, one organisation introduced a ‘Championship League’. Each team within the organisation was given a target to submit at least one idea that could lead to VfM or efficiency savings and the results were collated. This resulted in a competitive spirit developing between teams, as well as a genuine understanding of how operational teams can impact on delivering VfM outcomes. This is something that can easily be carried out in any organisation and will really get staff thinking about their responsibility towards VfM. ’



TIP: Getting everyone interested in VFM is the best way to ensure your VfM strategy is carried out positively by all of your staff.

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DEVELOPING A VIABLE VFM STRATEGY To ensure delivery of the VfM strategy, organisations should provide clear links between the front line, strategic objectives set out in the business plan and other key documents. Organisations should: • Set team targets, supported by individual performance targets • Review these targets at regular intervals and as part of an annual appraisal process • Have a focus on VfM and performance issues at team meetings • Use one-to-ones to keep targets a live issue • Organisations should involve staff in working groups to review and improve VfM performance



TIP: An embedded culture drives the way in which the organisation thinks and operates; the way in which a host of characteristics, behaviours and processes come together to shape organisational culture.

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The VFM Toolbox

Preparation Obtain necessary information, resources and skills. By the end of this stage you should have an outline plan for a VfM health check and feel confident about who is doing what and why. Where are we now? Build a picture of the current organisational priorities & performance. By the end of this stage you should have enough data to enable you to start assessing where priority areas lie. Where to focus effort? Which areas of the organisation are priorities for VfM review? By the end of this stage you should have a long list of ideas for improving VfM. What initiatives could improve priority areas? Identify possible VfM projects or initiatives within priority areas. By the end of this stage you should have a long list of projects for improving VfM.

Prioritise VfM projects Decide which projects / initiatives to proceed with. By the end of this stage you should have a shortlist of projects to take forward. Implement VfM projects Apply a project management approach to implementing VfM improvements. By the end of this stage you should have one or more live projects aimed at improving VfM. Measure VfM performance Ensure achievement and sustainability of outcomes.



How to Create Effective E-learning Delivering Value for Money 12

RESOURCES Visit www.vc-resources.co.uk to download free resources to help you on your e-learning journey. • Quick guides • E-Books • LMS user guides • Video tutorials • The latest news Contact us, we’re here to help 01943 605976 www.virtual-college.co.uk [email protected] follow us on @elearning_UK

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