As schools hunker down for future public spending cuts, finance expert, Malcolm Trobe offers some timely advice on how to get extra value for money from your budget.
There are some pearls of wisdom that are passed down from generation to generation, and I can still remember a conversation between my parents when they were standing in a car showroom looking to replace their well travelled Morris Minor. “Cheapest is not necessarily the best value for money,” said my dad. “Aye, and being expensive does not guarantee quality,” responded my mother. Of course, they were both right – and their comments are just as valid today. Deciding how to spend your hard-earned cash is never easy and neither is determining how to make the most of your school budget.
In earlier articles I considered an understanding of the term ‘Best Value’, indicating that it goes beyond the value for money (VFM) principles. These VFM principles are, however, very important and need to be considered in relation to procurement, suppliers, risk management and option appraisal. This is all part of the process of a school making best use of its budget to raising its educational standards as far as possible.
VFM has three main elements: economy, efficiency and effectiveness. It is helpful to have a common understanding of these terms in discussions within a school leadership team, the governing body and with all those involved in the procurement of goods and services in a school.
- Economy means minimising the cost of resources while ensuring the right quality.
- Efficiency means the relationship between the resources used and the output in terms of services or goods.
- Effectiveness is the extent to which the actual outcomes match the intended outcomes.
Listening to a school business manager talking about the procurement process recently was very informative. She indicated that her school had a checklist of factors they considered when making decisions. She made it clear that cost was a key element, but some form of guarantee of quality was essential. They looked at the reputation of the supplier and their capacity to provide them with what they wanted when they wanted it. The reliability of the supplier was very important and the after-sales service was also a critical factor.