Value for Money (VfM) in procurement refers to using resources optimally to achieve the desired outcome—not just opting for the cheapest option, but balancing cost with quality and effectiveness across the lifecycle. It means selecting the bid that offers the best overall combination of price, efficiency, quality, durability, and wider impact. This includes considering ongoing costs, performance, and value achieved—not only the immediate purchase price.
VfM is a core principle of procurement policy, especially in the public sector. It emphasizes a broader view than cost alone, integrating lifecycle and qualitative aspects to ensure long-term benefit and sustainability. Many public procurement frameworks and banks define VfM as the efficient, effective, and economical use of resources, often requiring analysis of outcomes versus costs to guide decision-making.
In practice, achieving VfM means taking into account whole‑life costs—covering acquisition, operation, maintenance, and disposal—while also evaluating non-financial factors like quality, sustainability, and user impact. By applying VfM, procurement decisions are grounded in both economic and societal value, fostering better outcomes over the long term.
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