Annex 9
Value for Money Principles
1. Basic Principles
Value for Money (VfM) is about maximizing the impact of every money spent to improve
people’s lives. VfM does not mean to do the cheapest things. It is understood that the
hardest to reach people and places that need peacebuilding support could cost more and
the DCPSF will supports such interventions. The important thing is to get better
understanding of what the main drivers of costs are and how to get the desired quality at
the lowest price.
2. How to Measure: Using 3Es
To maximize the impact of the DCPSF projects and monitor VfM, information about the
specificity of results (activity results, outputs and purpose), assumptions and the costs to
deliver the results are critical. Therefore, in measuring VfM, the 3 E framework–economy,
efficiency, effectiveness and cost-effectiveness-- is considered as criterion and it is
important to show evidence of maximizing 3Es in achieving the results in the proposals.
In developing your projects, please include evidence to support the following points of 3Es.
The following is to have a common understanding of what 3Es mean. A few examples to
measure each E are also included. However, these are just indicative and an important
thing is that your proposal indicates what and how the project measure VfM by specifying
results, assumption and inputs (inputs include staff, consultants, raw materials and capital
used to produce inputs).
(a) Economy
Are we buying inputs of appropriate quality at the right price? What are the main drivers of
costs? How do you plan to manage such costs?
In order to review those points, in the budget, we need unit cost of inputs to deliver results.
For example, developing a water committee by providing a water pump, inputs will be
broken-down into the cost of material costs, personnel cost, contracted workers, training of
the water committee etc.
VfM is not about looking for cutting costs. Therefore, it is important to clearly specify the
results that justify the costs. For example, you may need a specific training or workshop
only for women to meet their particular needs or/and respond to cultural sensitivity. It may
increase inputs but can be justified by clearly stating the results as well as assumptions.
Also, you may need to take any special arrangement to secure access to the project site
when you plan to reach the hardest point. Then, it is important again to justify and provide
evidence of such costs and how you manage them vis-à-vis the results you deliver and
based on the assumption.
The following are examples for measuring economy aspects in your proposal:
 Local inputs (national staff, national consultants, goods and services procured
nationally) /international inputs (international staff, international consultants,
goods and services procured internationally)
 Supporting costs/ total budget
(b) Efficiency
How well do we convert inputs into outputs? Are we developing capacity from the scratch
or are we building on what they already have? Is there commitment and ownership from
the local counterparts on the results we want to deliver?
One of the ways to measure efficiency would be to monitor the cost spent for delivering the
results. For example, output 1 is to make community-level conflict resolution and
prevention platforms in place and effective and how much cost is planned to deliver such
platforms in place and for them to function effectively.
(c) Effectiveness
How well are the outputs from an intervention are achieving the desired outcome on
peacebuilding?
For measuring effectiveness, the revised DCPSF results framework included indicators for
the purpose level and results of outputs, e.g. indicator 1.3 Number of cases submitted and
resolved by the conflict resolution and prevention platforms. It is important to indicate in
your proposals how well your project is achieving the outcomes and performance of
deliverables, i.e. target of the number of cases that the conflict resolution mechanisms
solve (DCPSF indicator 1.3), target number of collaborative income generation
opportunities (DCPSF indicator 2.1) and how you monitor them.
(d) Cost-Effectiveness
How much impact on stability and peaceful co-existence between communities does an
intervention achieve relative to the inputs that are invested in it?
While the DCPSF at the fund level monitors how much impact the DCPSF projects deliver
on the overall with the allocated funding, it is useful to see costs per output from each of
the project as is explained above under (b) efficiency.