Value for Money is concerned with obtaining the best possible combination of services from the least resources. It is thus, the pursuit of economy, efficiency and effectiveness. Below are the mechanisms used to achieve value for money.

• Economy
  Economy is the term and condition under which an organization acquires human and material resources of the appropriate quality and standard at the lowest cost. From this procurement will be a purchasing activity whose purpose is to give the purchaser best value for money and that for complex purchases, value may imply more than just price since quality issues also need to be addressed.
• Efficiency
  Efficiency as the relationship between goods and services produced and resources used to produce them. An efficient operation produces the maximum output for any given set of resource inputs; or, it has a minimum input for any given quantity and quality of services provided In addition, efficiency implies practicality, especially in terms of compatibility with the government’s administrative resources and professionalism.
• Transparency & Accountability (Ethical Standards)
  Good procurement holds its practitioners responsible for enforcing and obeying the rules. It makes them subject to challenge and to sanction, if appropriate, for neglecting or bending those rules. Accountability is at once a key inducement to individual and institutional probity, a key deterrent to collusion and corruption, and a key pre-requisite for procurement credibility.
• Accountability, fairness and efficiency in public procurement
  Accountability, fairness and efficiency are three cardinal pillars that procurement reforms seek to achieve in that a very fair and accountable procurement system helps in the efficient utilization of the state resources judiciously. Procurement practitioners need to be very fair in their day-to-day dealings with their suppliers and potential bidders and the public at large in order to earn the trust of the various actors within the procurement system. Accountability refers to the process of holding an individual or an organization fully responsible for actions and functions they are engaged in and over which they have authority to exercise those functions.
• Competition
  Competition has been regarded as one of the most important factors in attaining value for money in Public sector. This is on the premise that competition amongst bidders can lead to improvements in pricing and alternative means of delivering VFM. Competition can either be for the market (i.e. in the bidding process) or competition/contestability in the market which occurs after the contract is concluded and is in operation. On the contrary, the absence of competition or potential entry would lead to difficulties in attaining higher efficiency and value for money.

• Not all projects are feasible (for various reasons: political, legal, commercial viability, etc.)
• The private sector may not take interest in a project due to perceived high risks, lack of technical, financial or managerial capacity to implement the projects.
• A PPPs projects may be more costly unless additional costs (due to higher transactions and financing costs) can be offset through efficiency gains.
• Change in operations and management control of an infrastructure asset through a PPP may not be sufficient to improve its economic performance unless other necessary conditions are met. These conditions may include appropriate sector and market reform, and change in operational and management practices of infrastructure operations.
• Development, bidding and ongoing costs in PPP projects are likely to be greater than for traditional government procurement processes – the government should therefore determine whether the greater costs involved are justified. A number of the PPP and implementation units around the world have developed methods for analyzing these costs and looking at Value for Money, e.g., UK Treasury.
• There is a cost attached to debt – While private sector can make it easier to get finance, finance will only be available where the operating cash flows of the project company are expected to provide a return on investment (i.e., the cost has to be borne either by the customers or the government through subsidies, etc.)
• Some projects may be easier to finance than others (if there is proven technology involved and/ or the extent of the private sectors obligations and liability is clearly identifiable), some projects will generate revenue in local currency only (eg water projects) while others (e.g. ports and airports) will provide currency in dollar or other international currency and so constraints of local finance markets may have less impact.
• Some projects may be more politically or socially challenging to introduce and implement than others – particularly if there is an existing public sector workforce that fears being transferred to the private sector, if significant tariff increases are required to make the project viable, if there are significant land or resettlement issues, etc.
• There is no unlimited risk bearing – private firms (and their lenders) will be cautious about accepting major risks beyond their control, such as exchange rate risks/risk of existing assets. If they bear these risks then their price for the service will reflect this. Private firms will also want to know that the rules of the game are to be respected by government as regards undertakings to increase tariffs/fair regulation, etc. Private sector will also expect a significant level of control over operations if it is to accept significant risks.
• Private sector will do what it is paid to do and not more than that – therefore incentives and performance requirements need to be clearly set out in the contract. Focus should be on performance requirements that are out-put based and relatively easy to monitor.
• Government responsibility continues – citizens will continue to hold government accountable for quality of utility services. Government will also need to retain sufficient expertise, whether the implementing agency and/ or via a regulatory body, to be able to understand the PPP arrangements, to carry out its own obligations under the PPP agreement and to monitor performance of the private sector and enforce its obligations.
• The private sector is likely to have more expertise and after a short time have an advantage in the data relating to the project. It is important to ensure that there are clear and detailed reporting requirements imposed on the private operator to reduce this potential imbalance.
• A clear legal and regulatory framework is crucial to achieving a sustainable solution.
• Given the long-term nature of these projects and the complexity associated, it is difficult to identify all possible contingencies during project development and events and issues may arise that were not anticipated in the documents or by the parties at the time of the contract. It is more likely than not that the parties will need to renegotiate the contract to accommodate these contingencies. It is also possible that some of the projects may fail or may be terminated prior to the projected term of the project, for a number of reasons including changes in government policy, failure by the private operator or the government to perform their obligations or indeed due to external circumstances such as force majeure. While some of these issues will be able to be addressed in the PPP agreement, it is likely that some of them will need to be managed during the course of the project.

• Build Operate and Transfer:
  Here the private sector invests in the asset and will be granted the right to operate the asset for a specified period after which the residual asset is transferred to the public agency.
• Build own and Transfer
  Under BOO the private sector builds, possess, and operate the facility and has control over profits and losses generated by the facility through time. This is similar to a privatization process except that the goods and services rendered remain public goods and services. For example, a private sector builds a bright across a river, owned it and operates it. The residual asset remains that of the private investor.
• Build Transfer and Operate.
  Under this arrangement, the private partner invest in building the asset and immediately concedes ownership to public agency (usually because of the restricted nature of the asset) and the public agency transfers exclusive right of use to the private partner.
• Rehabilitate Operate and Transfer.
  The initial worn-out asset is provided by the public agency requiring the private partner to invest in revamping the asset and allowed to operate it for a specified period and residual asset transfer to the consolidated fund..
• Design Build Operate and Transfer.
  The private sector provides financing and design, then builds, possesses, and operates the project. The public partner only provides funding while the project is being used or is active.
• Service Concession
  In this arrangement the public agency engages a private company to operate and maintain the facility for a specific period of time under certain contract terms. Here the public agency concedes all exclusive ownership rights to the private company without transfer of ownership. While ownership remains with public agency the private partner possesses owner rights over any addition incurred while it’s being operated under its domain.
• Maintain and Operate
  Under this arrangement the public agency invests and owns the project and the private partner is responsible for operating and maintains the project or asset for an agreed consideration. The residual asset remains the property of the government agency.

• Disclosure – Making information available to stakeholders;
• Organisational Structure – Defines clearly the authority and responsibilities of individual office holders;
• Reporting – Provision of financial, administrative and other relevant entity reports to government and other stakeholders;
• Transparency – Making information available at no or low cost Openness to stakeholders
• Predictability – Adherence to law and regulation that are clear and known in advance, uniformly and effectively enforced

i) Delayed or unbanked collection
*I would ensure that all revenues are banked immediately.
*One measure to achieve this is through arrangement with banks to facilitate direct deposit by the payers into the bank account of the Assembly.

ii) Failure to assess and collect revenue
*All revenue payers should be identified and levied appropriately.
*Revenue collectors should be trained and motivated to perform their duties efficiently.
*Electronic means should be used to effect revenue collection.

iii) Inappropriate use of value books
*Security and custody of the value books should be ensured.
*Ensure that only approved values books acquired from Controller and Accountant General is used.
*The head of finance should ensure property custody of stock of value books and this value books should be issued out to only responsible staff. Proper records should be maintained for issue of value books.

iv) Poor recording keeping
*Responsible officer should be appointed for record keeping over revenue. The cash receipt book or transcript should be updated regularly. Implementing approved accounting software be effective measure to improve record keeping process.

The following are the differences between ABB and PBB

• ABB links resources allocation to the activities required to be undertaken in order to achieve a desired output but PBB assigns resources to measurable result to be achieved.
• ABB emphasis the relationship between activities and cost thereby producing much detail on overheads whereas PPB focus on the linkage between programme funding level and expected result of the programme.
• ABB produces detail information on cost on each activity thereby making control cumbersome but PPB aggregates cost information at programme level rather than activity level.
• ABB provides full costs of programmes and services which are more transparent and available for planning, budgeting and decision making whereas PPB consolidates the cost information thereby limiting transparency and available of full cost information for planning, budgeting and decision making.

• It provides a framework for measuring the performance of the MDA expenditure programmes.
• It enables effective management of resources to achieve government outcomes or objectives since the emphasis is on programmes attainment rather than a mere performance of activities
• It promotes process accountability and transparency that enables the public to judge the fiscal stewardship of the managers.
• It provides a specific linkage between resources allocation and strategic policy objectives of the MDAs. That is, it establishes closer link between resources allocated and what has been done with it.
• It makes budget evaluation and control much focus and conclusive. It becomes very easy to measure which programme outcomes are achieved and those that are not.

i) Identification of item of store or equipment to be disposed off.
ii) Head of department convenes a Boar of Survey (BOS) to make technical assessment of the store or equipment to be disposed and make recommendation in a report to the head. Head of department based of BOS report seek approval from the appropriate quarters (e.g minister).
iii) The disposal process is initiated based on the method approved for use (transfer to other government institutions, public tender or public auction)
iv) The stores and vehicles are valued by an approved and reputable public or private professional agency with the requisite technical knowledge;
v) In case of public auction, the following procedures are followed:
a. The stores and vehicles are valued by an approved and reputable public or private professional agency with the requisite technical knowledge;
b. The valuation report is submitted to the office of the President and head of the Agency;
c. The value submitted is used as the selling price (bargaining bench-mark) to the public auction;
d. A date for auction is agreed with the head of the agency or department;
e. An advertisement is placed in the national newspapers for the date and place of the auction and the items to be auctioned;
f. On the auction day the highest bidder above the bench mark wins.

DATE              : xx/xx/xx
TO                   : District Chief Executive
FROM             : District Finance Officer
SUBJECT        : Re-Directives on Procurement Methods in the Assembly
I write to you some concerns I have about your new directive on public procurement in the assembly. I agree that competitive tendering ensure value for public moneys through competition and fairness. The Procurement Act 663 also emphasizes the importance of the competitive tendering in securing judicious use of public resources in public procurement. However, the current directive will not be appropriate in all circumstances.
i) Circumstances under which competitive tendering will not be appropriate:

• Diseconomy in procurement where cost incurred in procurement far exceeds the value of the goods, services and works procured. This is normally the case with low value goods and services in which case alternative method will have been appropriate.
• Impracticability of the directive where there is only one or few supplier or contractor for the goods, services, and works
• Where there is a time constraint due to urgency or catastrophic event, competitive tendering may cause undue delay.
• Competitive tendering will not be appropriate when national security is at stake.
• It is also not appropriate when it is not feasible for the procurement entity to formulate detailed specifications for the goods, services or works.

ii) Other methods allowed by the Procurement Act in absence of competitive tendering include:

• Two-stage tendering
• Restricted tendering
• Single sourcing
• Request for quotation                                                                                                            Thank you.

• The procurement entity must be legally and financially autonomous and must operate under commercial law
• The existence of the procurement entity must be beyond contention that public sector procurement procedures are not suitable, considering the strategic nature of the procurement.

• Ensures value for money;
• Provide competition and transparency to the extent possible.

i) New Innovations
Sometimes financial regulations designed to promote financial soundness and reporting may prevent desirable changes and interfere with the ability of the financial system to adapt to new technology and innovations.
ii) Span of Time
Span of time may result in population increases, environmental changes and changes in organisational structures. All these changes may impinge on the goals of a public entity and cause delays in the processes for the preparation of financial reports.
iii) Cost Benefit
Generally, the cost of providing financial information should not exceed the benefits to be derived from financial reports. Therefore if existing financial regulatory framework results in more expensive means of preparation of financial statements the regulations tend to lose their relevance.
iv) Quality of Financial Reports
If existing financial laws and procedures do not enhance the quality of financial reporting, the objectives of providing financial information may be compromised

• Slow Economic Development: Economic development mainly depends upon industrial development. Huge capital is required for establishment of such heavy & basic industries. This capital required for these industries is easily & readily made available by public sector but it is practically not possible for a private sector to run these industries.
• Lack of Regional Development: Private sector usually neglect backward area. But public sector organizations set up their units in economically backward areas. By this public sector removes regional imbalance & brings regional development.
• High Unemployment: Various public sector organisations operating in Ghana needs lot of manpower & this provide employment to unlimited individuals according to their education, experience & abilities. Without this there will be high unemployment.
• Bad Service Motive: Public sector organizations are working with the only motive of providing public utility services to society at large irrespective of profit.
• Lack of Infrastructure: Rapid industrial growth in a country needs sound infrastructure. Infrastructural industries require huge capital for construction of Roads, Railways, Electricity & many such industries. Private sector is unable to have such huge capital & that also without any high return but public sector can easily afford to provide all infrastructural facilities.
• No Protection to Sick Industries: Public sector, to prevent sick unit closing down, takes over their responsibility & prevent many people from getting unemployed not only this but it prevents unnecessary locking of capital, land, building, machinery, etc.