How are WASH sector organisations already using Value for Money analysis?
At an event last week at LSHTM, a team of researchers presented latest findings from ongoing research into Value for Money (VFM) in WASH. This presentation was coupled with a panel discussion on how, where and in what ways different WASH organisations are thinking about using VFM in their work.
Two things quickly became clear during the panel discussion; that many organisations are already doing some form of VFM analysis (though they may not call it such); and that the question of how to take VFM beyond discussions of ‘unit costs’ is at the front of everyone’s mind.
Laura Westcott (DFID) explained that DFID’s definition of VFM is adapted from the definition the UK government applies to domestic policy, that is, ‘to maximise the impact on poor people’s lives of every pound spent’. In the short- to medium-term, they will issue sector guidance for DFID’s focal areas and a revision to their position as outlined in a 2011 paper on the subject.
As part of ongoing learning, DFID have already begun to use VFM analysis at different levels. At the programme level, VFM indicators have been embedded into the design of some large initiatives, such as the WASH results programme. These indicators are not limited to service delivery, but contain knowledge components.
At a more strategic level, VFM analysis is being used to shed light on the extent of DFID’s impact, depending on the ways in which it engages with other institutions, governments and their systems. One example includes using VFM analysis to assess the relative benefits of using different funding modalities, such as in the case of the choice to support the Global Partnership for Education instead of bilateral funding.
Nicolas Osbert (UNICEF Zambia) outlined how UNICEF recently overhauled their financial system, meaning that expenditure is now allocated against planned outputs. Organising financial monitoring in this way will facilitate a higher quality of VFM analysis, as a key challenge is making a direct link between inputs/outputs. In the case of Zambia, this analysis has already been used to inform choices on programmatic approaches, through setting benchmarks and raising quantitative flags for qualitative assessments.
Challenges in broadening the analysis are due in part to a lack of comparator programmes against which to benchmark. In the short run, assessing sustainability also remains a challenge. However, as time progresses, UNICEF hope that the new M&E system will be able to capture some sustainability dimensions.
Girish Menon (WaterAid) explained how WaterAid used to use ‘cost per beneficiary’ benchmark data, and continue to have accounting systems that capture data on the costs of service delivery. However, WaterAid found ‘cost per beneficiary’ to be an increasingly blunt management tool in the context of complex and multi-dimensional projects with aims beyond pure service delivery.
In the pursuit of more relevant data, WaterAid are currently on a ‘disaggregation spree’ in an attempt to break projects down by activity, sub-sector (water, sanitation, or hygiene), and whether the work contributes to strengthening the WASH sector in which it takes place.
David Shimkus (Global Sanitation Fund), emphasised that GSF is not satisfied with a simple ‘cost per beneficiary’ metric. If the goal is to meet the most vulnerable with sanitation services, such a blunt indicator may create perverse incentives. GSF are in pursuit of comparable indicators, and are currently harmonising their M&E indicators and exploring opportunities to rationalise cost categories in their financial management system, so as to allow future VFM analysis to be more accurate. For a more detailed overview of the Global Sanitation Fund approach to sustainability and VFM see the accompanying presentation here.
In conclusion, it appears that while many WASH sector organisations are thinking about VFM analysis, many are still setting up their financial and M&E systems in order to be able to do it accurately. In addition, while stakeholders note that ‘cost per beneficiary’ metrics are a key basic VFM indicator, it is generally agreed to be crucial to go beyond these and consider the figures in light of the programme context, as well as the equity and sustainability of achieved outcomes.