Value for money (VFM) refers to a concept widely used on individual and public basis, literally to mean whether the benefit of using the acquired service or product is worth the money spent or not. It is essential for every organization to analyze all the issues to create an effective value for mon...
Value for money (VFM) refers to a concept widely used on individual and public basis, literally to
mean whether the benefit of using the acquired service or product is worth the money spent or
not. Asian Development Bank (2018), define VFM as a part of a holistic procurement supported
by three pillars of efficiency, quality and flexibility. This notion is the optimum combination of
whole-life cost and quality to meet the user’s requirement.
Generally, value factors advert to anything that might affect the cost and benefit of any product
or service such as technical, economic, service or social which can be measured different. In
this essence, Jackson (2012), argued that value for money is a right balance between four Es of
economy (Reduce the cost of utilized resources), efficiency (increase output for given input or
vice versa), effectiveness (achieve the intended outcomes) and equity (Fair allocation of
benefits). These factors would be considered while buying the product or use services. It can be
inferred that VFM is not a tool or method, but a way of thinking about how well using resources.
Additionally, time is a critical element of VFM, thus considering the shorter cycle time frame and
accelerating the delivery will be considered.
According to Steve and his colleagues (2005), products win in the market by considering
reputation, perceived value for money and other intangible factors that determines decisions.
Value for money is considered by every customer and includes quality and the real price of the
product. The eight dimensions discussed by Stoner and Hattwick (2000) for a quality standard
of product or services should be considered for VFM.
Overall, it is essential for every organization to analyze all the issues to create an effective value
for money. This evaluation rises a constant customer satisfaction and loyalty which will lead to
the competitive advantage.
References
Asian Development Bank (2018). Value for money. Guidance notes on Procurement. Pp.5-
19.Retrieved from https://www.adb.org/sites/default/files/procurement-value-money.pdf
Fry, F., Stoner, C. & Hattwick, R. (2000). Business: An Integrative Approach 2nd ed. Mc Grow-
Hill, New York
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through EFT, credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying this summary from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller moloodmohammadi. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy this summary for R0,00. You're not tied to anything after your purchase.
