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
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
