The use of the very words 'value for money' is a clear signal that project success encompasses more than price.
A selection of VfM definitions used by federal and state governments includes:
• Victorian Government, Department of Treasury and Finance, Strategic Sourcing Policy
Value for money denotes, broadly, a balanced benefit measure covering quality levels, performance standards, risk exposure, other policy or special interest measures (e.g. environmental impacts), as well as price [of inputs and outputs]. Generally, Value for Money is assessed on a "whole of life" or "total cost or ownership" basis, which includes the transitioning-in, contract period and transitioning-out phases of a contractual relationship. It is often used in the sense of the "long-term sustainability of Value for Money", denoting that the state focuses on choices that ensure Value for Money outcomes are promoted and protected in successive anticipated contracts.
Value for Money is the core principle underpinning Australian government procurement Officials buying goods and services need to satisfy that the best possible outcome has been achieved taking into account all relevant costs and benefits over the whole of the procurement cycle.
• New South Wales Government, Department of Treasury, "Code of Practice for Procurement"
Value for Money is defined as the benefits compared to the whole of life costs.
• Queensland Government, Department of Public Works, "Better Purchasing Guide - Value for Money"
Ensuring Value for Money is one of the three objectives of the state Purchasing Policy. Government purchasing must achieve the best return and performance for the money being spent. Price is not the sole indicator of value.
All these definitions are reasonable and aligned. Analysing these VfM definitions or even presenting a wide ranging debate on the best VfM definition adds little benefit, as each statement is drafted for a particular jurisdiction and context.
This Study has been guided by the Victorian definition of VfM as it is the most detailed and provides a wider range of value elements for consideration. While this definition (like the others listed) provides aspirational guidance to agencies implementing capital projects, the practical assessment of VfM is more difficult.