Engaging the economic facts and valuations underlying value for money in public procurement

ABSTRACT

This paper examines the possibilities and limitations in pursuing value for money (VfM) in public procurement. There is ambiguity about the VfM concept and the methods that public procurers should be using. It is difficult for decision-makers to thoroughly understand the economic facts and valuations underlying VfM. The authors explain the conceptual VfM challenges and present a path to overcoming these with a lifecycle costing (LCC) approach in an indepth case study in the Finnish waste management context.

IMPACT

Policy-makers and managers need to be aware that different stakeholders could have different views of what value for money (VfM) is. The authors present a new way of overcoming VfM challenges. They show that lifecycle costing (LCC) provides clear benefits for public procurers to assess the potential for VfM in the pre-tendering phase.

KEYWORDS:

• Lifecycle costing
• public procurement
• value for money
• waste management