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For Government interventions to work well, they need to be implemented successfully at multiple levels. To get the most from limited resources, it is necessary to demonstrate both efficiency and effectiveness while delivering the intended outcomes. This is known as achieving value for money.
Recently, we collected insights from central government departments, transport agencies, regional and local government as well as transport practitioners to help us consolidate different definitions, approaches and frameworks into a Value for Money Assessment Model.
At a minimum, achieving value for money requires making sure investments target what society needs, what it values and what it can afford. It must take the entire intervention life cycle into consideration.
Unfortunately, the current level of maturity in assessing, delivering and evaluating interventions against the transport outcomes sought across the sector is mixed.
The lack of a common working definition of “value for money” has resulted in inconsistencies in how value for money is understood and assessed. This makes it difficult for central agencies to take a systematic and consistent approach to monitoring and evaluating the delivery and achievement of outcomes.
The need to supplement cost benefit analysis
While traditional cost benefit analysis is still one of the key tools to inform evidence-based decision-making, it has a number of limitations that call for additional tools and approach.
The value for money approach can supplement a cost benefit analysis to:
Best practice value for money principles
We want to ensure our transport system delivers the desired social, economic and environmental outcomes. To assess and evaluate value for money from interventions, the transport sector needs to take a consistent and comprehensive approach.
Our Value for Money Assessment Model is underpinned by three fundamental best practice
The key is to embed the thinking throughout the intervention life-cycle process
Interventions affect health, social, economic and environmental outcomes and the values they create for individuals, businesses and the economy.
To realise these values, we must apply a consistent approach throughout the entire intervention life-cycle. This covers various stages of a project or programme, including development, procurement, operation, monitoring and evaluation. Achieving value for money goes beyond conducting a cost benefit analysis.
Figure 1: Proposed Value for Money Assessment Model
The proposed Value for Money Assessment Model has five inter-linked assessment elements that seek answers for five crucial questions.
What is next?
To help the sector develop its maturity in delivering value for money, Te Manatū Waka Ministry of Transport will further engage the transport sector to develop guidance to outline the mechanisms for applying the Value for Money Assessment Model. If you have further comments or suggestions on the outlined Value for Money Assessment Model, please email