The Value for Money Concept in Investment Evaluation
Deconstructing its Meaning for Better Decision Making
The term "value for money" (VFM) is a poorly understood concept in practice. There is a lack of clarity in its application, especially in the distinction between "value" and "money" when assessing VFM in investment evaluation and decision making. This article clarifies the ambiguities in VFM by conceptually deconstructing its meaning using a "value triangle model" and, on that basis, we propose a six-step VFM assessment procedure, which has been tested during VFM workshops on infrastructure projects. Departing from the existing concept of value in value management and value engineering literature, the value triangle model rests on Daniel Bernoulli's concept of value as captured in his famous quotation: "The value of an item must not be based upon its price but rather on the utility which it yields" (Bernoulli, 1954, p. 24). We deconstruct value into three components using everyday language: useful purpose, beneficial outcomes, and important features, making it applicable to any VFM decision context. By making a clear distinction between value and money and, by treating value and value for money as separate notions, greater clarity of VFM is provided, thus enabling more effective measurement in practice. Implications of the proposed deconstruction of VFM and the six-step procedure are discussed using stakeholder theory.