Value Management and VFM in the Omani Government Report

This report delves into the concept of Value for Money (VFM) within the context of the Omani government, emphasizing its importance in public resource management and decision-making. It begins with an introduction to VFM, its significance, and its application in securing improvements in efficiency and resource allocation within the public sector. The report then assesses the performance of public sector infrastructure in Oman, highlighting the need for reliable data and addressing the limitations in current evaluation activities. It further explores solutions to mitigate potential failures in VFM implementation, focusing on the importance of ethical practices, proper risk management, and the assessment of projects for incremental value. The report also discusses opportunities for value management, particularly during the operational phase of Public-Private Partnerships (PPPs), emphasizing the roles and responsibilities of both public and private partners in achieving desired outcomes. The importance of a healthy relationship between partners is also discussed. The conclusion stresses the importance of transparency and the utilization of resources in order to obtain maximum benefit.

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VALUE MANAGEMENT

VFM
Executive Summary
With the due passage of time, value for money has attained a place of special importance. In
this report, VFM for the Omani government has been taken into consideration. The report
stress upon important areas that pertain to Oman and Value for money. The report initiates
with the introduction followed by the description of value for money. It then sheds light on
the performance assessment of public sector infrastructure in Oman. Further, solutions that
can mitigate failure is dealt in an in-depth manner. Further, the opportunities for value
management are discussed in the report.
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Contents
Introduction...........................................................................................................................................4
Value for money....................................................................................................................................4
Value for money performance assessment and attainment of public sector infrastructure in Oman...5
The solution that can mitigate failure....................................................................................................6
Opportunities for value management...................................................................................................7
Conclusion.............................................................................................................................................9
References...........................................................................................................................................10
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Introduction
Value for money or VFM is an important element of the process of decision making for any
proposal that comprises of the utility of public resources. VFM performance has been
selected by the Omani Government as a major area for the attainment of securing
improvement in terms of efficiency and release of resources for the use in delivering front-
line services. Value for money can be used as a potent tool by the public entities to attain the
maximum benefits from the goods and services provided as resources. VFM should be
economic in nature. VFM analysis enables managers to enhance the performance programme.
It helps the managers to ascertain the influence of challenges they observe and know the
interventions that are best that could lead to resource allocation (Leo, 2011).
Value for money
Value of money can be understood as a method that can be used by the public entities in
order to receive the maximum benefit from the goods and services that have been provided to
them as resources. Also in relation to sustainable development, it has been intercepted by
IISD that value for money always is in accordance with the whole life cost audit total
ownership cost which can also be understood as the cost of an asset which will not only
simplify the point of purchase but also the design, raw material sourcing, construction,
operation and end of life decommissioning (Needles & Powers, 2013). Therefore, it can be
stated that value for money not only takes into account the financial feasibility of an asset but
also tries to look after the material and energy intensity, durability, fitness for purpose, the
social multipliers and skill building which when used together can be very helpful.
It has been cleared and settled in the public procurement act, 2003 that public procurement
generally means acquisition of goods, works, and services in the best possible cost of
ownership in the right quantity and quality and it in the right time and right place so that
maximum revenue can be generated and used by government, individuals and corporations
with the help of contracts (Handley & Limao, 2015). Hence, a public document is a process
by which the company tries to get hold of goods and services with the help of public funds.
This process also includes planning, inviting offers from awarding contracts and other
management functions of contracts (Porter & Norton, 2014). Generally, in order to achieve its
goals, the organization should follow these two principles: Professionalism and value for
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money. professionalism can be defined as the discipline that is required in order get the task
done easily bah being educated, experience and responsible while making procurement offers
and also make informed decisions in relation to the purchase operations (Laux, 2014). The
basic role of recruitment professionals is to critically analyze the economic development of
Oman. Value of money can also be obtained with the help of the optimal balance of costs and
benefits which can be we found out with the help of total cost of ownership (Kehoe & Ruhul,
2013). Also, the value for money e doesn't even just means that a tender must be awarded to
the lowest valued renderer but it should be provided to the person with best and optimal skills
as well as cost (VFM, 2018). Therefore, value for money is generally used to describe the
commitment to ensure the best results possible after spending money so that satisfaction can
be acquired. The UK Government has been observed to reflect all the transactions in relation
to the public funds in a transparent manner so that maximum benefit can be obtained with the
help of available resources (Mankiw & Taylor, 2011). Hence, value for money can be defined
as the maximum utilization of cost by improving the quality of the goods or services that
have been provided.
Value for money performance assessment and attainment of public
sector infrastructure in Oman
The basic application of the value of money in this context is the development activities for
evaluation techniques that are helpful for keeping reliable data. The statistics system in Oman
was not sufficiently equipped because of which an issue was created on the availability of
reliable data. Also, like every other measure and the measure of value for money reliable data
is required in order to get proper estimates of value and show that the problem of skills in the
Agencies and countries can be benefited with the help of the development funds (Petty et. al,
2012). The developments partners try to improvise the evaluation reports to show optimal use
of money and also master the process of value for money so that at the countries and
Agencies can be benefited at the same time. The application of this concept will be helpful
for harmonizing methods and tools from one partner to another. Advised framework and
harmonized report it will not only help the organizations and government to work efficiently
but also help them to achieve the development skills with the help of their evaluation
techniques (VFM, 2018). Hence, for attaining the desired result and public sector
infrastructure it is essential that the data must be present.
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A lot of limitations have been observed in the application of the concept of the evaluation
activities. These limitations institute of lack of reliable financial data, lack of development
add beneficiaries, non-harmonized methods and also the absence of guidelines for
implementation of the processes. The entire process can run into failure if there is a lack of
reliability in data accumulation. Once the wrong data relies upon it leads to a major breach
and the entire evaluation falls short of the planning process. Another important consideration
is that the guidelines should be present in a logical manner. The severity of project failure is
highly dependent on the time frame of its occurrence, and its impact on the same. Hence, it
needs to be noted that the time frame needs to be observed and tracked so that a clear
understanding can be obtained.
The solution that can mitigate failure
In order to safeguard VFM, one must consider both preparation and application process and
that too during the operational life of the contract. For the purpose of the same, it is very
much essential to managing the preparation and implementation process in a systematic
manner along with ethical practices. If these basics are followed then nothing can stop PPP
from becoming a successful one. It is necessary to evaluate whether the project is capable of
adding incremental value for money to the technical option or the project identified in
comparison to other procurement methods for the purpose of procuring a PPP (Madura &
Fox, 2011). Also, the PPP should be adopted after analyzing mainly the rightness,
commerciality, affordability, and feasibility of the project. The rightness of the project can be
derived by evaluating the technical feasibility and the best commercial option for the public
need of the same. Improper assessment of the VFM is one of the major associated risks
(Mankiw et. al, 2011). Hence, it is imperative that the assessment needs to be done properly
so that the project does not suffer. This means that there are probabilities for the errors to take
place while evaluating costs or deriving its benefits. Also, if the basic work is improperly
done or when the risks are unidentified in the initial stages then there are chances for the
improper assessment of VFM. In the presence of inaccurate drafting or inadequate handling
of the contract or tender process for the lifetime of the same, VFM can be lost (VFM, 2018).
Management of the contract is an important consideration that guides the destiny and
strengthens the VFM.
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The government should safeguard and maximize VFM so as to allow PPP to be a successful
one by means of both the preparation and application process during the operational life of
the contract. An entire project can fail if standard VFM is not achieved. Effective risk
management can allow a PPP process to be a successful one for the risks associated with
project failure and its consequences can be eventually reduced (Bodie et. al, 2014). It can be
said through-
 The rightness of the project – the dimensions of the project needs to be understood in
a clear manner. This helps to provide a clear framework and hence, attaining the goals
becomes easy (VFM, 2018)
 The preparation of the project and the way it is structured and managed so as to
lessen the consequences on quality, scope, cost and time and
 Analysis of the PPP so as to evaluate if it is the right delivery model for the project. It
is the most important step as it leads to the correctness in the selection. Moreover, the
project gets the required attention.
Opportunities for value management
During the operating phase if the PPP contract is managed by the public partner then
achieving VFM outcomes becomes convenient. No doubt, the private partner is solely
responsible for delivering the services that are agreed upon, but still, it is also the
responsibility of the public partner to check whether such services are performed
according to the expected standards (VFM, 2018). For the smoother functioning of the
whole process, it is extremely essential for the public and private partners to maintain a
cordial relationship throughout the life of the contract. This will help them in tackling any
such issues arising in the course of the process. In the case of public partner best benefit
that is derived is risk transfer where maximum risks can be explicitly allocated amongst
the private and public partners. So, it is very much crucial for governments to manage
their risk positions. It is a known fact that PPPs throughout their operational performance
is actually able to provide benefits to communities. It is very much essential for the public
partner to actively participate in boosting the performance delivered by the private
partners by means of taking required cohesive reactions from time to time or when
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necessary so as to make sure that the expected results are derived from the project (Parrino
et. al, 2012). Therefore, it is the responsibility of the public partner to monitor the
performance of the private partner so as to ensure the expected results are achieved on
time during the life of PPP (VFM, 2018). The performance management needs to be done
in a correct manner with perfection. A healthy and cordial relationship between partners
can go a long way. Co-operation and harmony in relationships bring in the work
environment that definitely contributes to the derivation of a better result. Un-cooperative
work environments contribute to the arising of operational difficulties amongst partners
(Mankiw, 2010). Therefore, partners should make sure that a good relationship is
maintained from both ends during the life of the contract in order to ensure expected
results are derived. The levels of corrective actions can lessen if the partners develop
cordial and harmonious working relationships amongst them. It is highly essential as cost
reduction is not always the ultimate goal for PPPs but ensuring that VFM is delivered
according to the expectations and encouraging the private partner to perform according to
the standards agreed upon in the contract (Gowthrope, 2011).
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Conclusion
Overall, it can be commented that a VFM analysis does not always pertain to saving money
or reduction of the unit costs. It is related to the maximization of actual outcome and
influence. The case study of Oman indicates that VFM is a potent area when it comes to
securing enhancement in terms of efficiency and release of resources for the utilization of
various services. The overall discussion strikes the notion that the VFM can be enhanced by
the reduction of the costs of certain inputs, greater and higher sustainable outcomes that can
be delivered by spending more on various inputs. Hence, from the discussion it can be said
that VFM analysis should ascertain the contextual elements of the programme, it is important
to gather the information on the conditions of operating, the modalities and approaches.
Hence, it is strongly recommended that VFM analysis should be considered as a major tool
for the programme managers and evaluators instead of a piece of analysis.
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international-trade [Accessed 5 April 2019]
Laux, B. (2014) Discussion of The role of revenue recognition in performance reporting.
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April 2019]
Leo, K. J. (2011). Company Accounting. Boston:McGraw Hill
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New York: Worth Publishers
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Needles, B.E. and Powers, M. (2013) Principles of Financial Accounting. (12th ed). Financial
Accounting Series: Cengage Learning.
Parrino, R, Kidwell, D. & Bates, T. (2012) Fundamentals of corporate finance. (2nd ed).
Hoboken,
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Petty, J. W, Titman, S., Keown, A. J., Martin, J. D., Burrow, M. and Nguyen, H. (2012)
Financial Management: Principles and Applications, 6th ed. Australia: Pearson Education
Australia.
Porter, G. and Norton, C. (2014) Financial Accounting: The Impact on Decision Maker.
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