Value For Money (Vfm)

Value For Money (Vfm)

Value for money (VFM) is an assessment of whether the money spent on procuring goods or services achieves the best possible outcome for the organisation.

In order to make a VFM assessment, Procurement must first understand what the organisation is trying to achieve (its objectives), and what options are available to meet those objectives. It then needs to consider the cost of each option, taking into account both direct and indirect costs. Finally, it must weigh up the benefits of each option against its costs, in order to choose the option that offers the best value for money.

There are a number of different methods that can be used to assess value for money, but all share the same basic steps:

1. Identify objectives: What does the organisation want to achieve?

2. Consider options: What are the different ways in which we could meet our objectives?

3. Assess costs: What are the direct and indirect costs associated with each option?

4. Weigh up benefits: How well does each option meet our objectives? Which option offers the best value for money?