Analysis of Value for Money in Public Sector Procurement Practices

This report provides an analysis of value for money (VFM) in the context of public sector procurement, focusing on the challenges and opportunities within this framework. The report begins with an executive summary and introduction, followed by a discussion of key concepts and ideas related to VFM, including its importance in achieving optimal outcomes and the role of the IT sector. It examines various factors that can lead to the failure of VFM initiatives, such as interest rates, inflation, and economic growth. The report also explores mitigation strategies to address these failures and identifies opportunities for value management. The study uses the context of Oman to illustrate the practical application of VFM principles and the impact of economic conditions. Finally, the report concludes with recommendations and a reference list to support the findings.

VALUE FOR MONEY IN THE CONTEXT OF PUBLIC SECTOR
PROCUREMENT
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1. Executive Summary
The idea of the project is to achieve quality in producing goods and services in order to achieve
value for money in terms of public procurement of goods and services. The various business
organizations implement strategic ideas in order to engage more developed working practices,
make new regulations and corporate strategies at the level of portfolios. It also sheds light on
analyzing extensive strategies, which need to take under consideration in terms of extensive
project management in order to make less new work practices. Moreover, IT sectors have the
opportunity to attain low value of human capital created due to the investments created through
generations in terms of science and technological education.
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Table of content
1. Executive Summary.................................................................................................................2
2. Introduction..............................................................................................................................4
3. Discussion................................................................................................................................4
3.1 Ideas related to the value for money for the benefit of public sector...................................4
3.2 Several factors related to performance of value for money fail................................................7
3.3 Approach for mitigating failure factors.....................................................................................8
3.4 Opportunities based on Value management............................................................................10
4. Conclusion..............................................................................................................................10
5. Recommendation....................................................................................................................10
Reference list.................................................................................................................................12
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2. Introduction
Value for money (VFM) indicates best combination of entire life cost and the standard level of
services in order to meet the satisfaction of public. Current study or assignment illustrates on
value, which is related to money (VFM), and it sheds light on VFM and it shows blank in the
procurement based on public. VFM varies on an individual project. In this context based on the
sector of public, this should be rather than value for money based on public procurement should
be placed in straight line with the strategy of an organization. The assignment offers highlighting
issues and examining by governments based on public. It also discusses value for money based
on expenditure, incorporated by the employees of this organization depends on the infrastructure
of projects. Valuation for a monetary purpose is continuously increasing as interest in that sector
is based on public. Moreover, the approaches also based on procurement that is lowest and has
been left in the case of the approaches based on value.
3. Discussion
3.1 Ideas related to the value for money for the benefit of public sector
Value for money (VFM) talks about not only the lowest possible amount of money rather it is
related to gaining optimization in terms of compilation of all necessary revenues in association
with owning a property as well as producing quality products and services. Though VFM was
known to attain achieving exact quality of produced goods and services in a definite amount,
within a stipulated time at desirable prices however the idea has been continuously updated in
order to obtain excellent choices of products in quantities more suitable and within time.
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Figure 1: Resolution on value management
(Source: Zhang et al. 2018)
As opined by Van Dooren, Bouckaert and Halligan (2015), the concept of achieving VFM can be
described in words such as advanced economic structure, efficiency in terms of performing
several activities and whether objectives are being able to be fulfilled on time. The objective of
attaining value for money can be met, by acquirement of goods and services through competitive
atmosphere. The primary goal to participate in such kind of competitions should be on behalf of
maintaining complexity in terms of public procurement.
Several actions that should be taken in order to achieve maximum value for money are:
 The several issues arise at the time of designing and specifying a product subjected
to commercial applications should be taken under consideration.
 A smart way of procuring goods and services is to use use standard resources while
manufacturing products.
 Usage of tender documents before manufacturing goods for public services.
 To deal with competitive pressure e-auctions should be used.
 Since low amount of money spend on several items is not the only prime factor of
achieving value for money but another procedure should also be taken under
consideration that is positioning of supply of products. It means plotting amount
spends on a particular good or service and the risk associated to manufacturing such
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products. Suppose there are more risks then only limited suppliers are available to
supply those products.
In words of Alhava, Laine and Kiviniemi (2015), the right to speak and expressing own views
are the common right of every people in the world. The basic law which was enforced in country
in 1996 was to enforce free liberty to speak, take decisions not influenced by any higher
authorities or organization. As proposed by Ameyaw and Chan (2016), the mission related to the
project is to provide the questionnaires that assess the project whether it will remain fixed or
phase likely. The priority issue is to provide headings, ask information and introduce a final
check in order to generate ways in which the customers reorganize various project themes. Value
for money is the assessment of the project delivered of that of the client. The client can assess the
project that is delivered with certain pre-assumed objectives. The client comes to conclusion that
the VFM is achieved when the services undertaken by them attain optimum price they spend on
it. IT sectors have the opportunity to attain low value of human capital created due to the
investments created through generations in terms of science and technological education.
 Widening of economic policies and aiming to attain stability
A wide and detailed portrayal of the transactions taking place in various public sectors generally
broadens the economic aspects related to its performance. As opined by Van Dooren, Bouckaert
and Halligan (2015), the prices of oil and gas may sometimes change, there may also be a certain
rise or fall in market prices of food however they may stabilize leading to a very good economic
structure and positive results with respect to the operations in the future.
 Progress in a structure of software industry
According to Zhang et al. (2018), the Information Technology industry is the most important
factor for public sector procurement. Government of country need to spend money in order to
provide fast internet connectivity as it aims to meet the globalised standards for the software
parks in IT sectors. Creation of modern telecommunication industry helps in bringing structured
framework of several import as well as exported items. IT sectors obtain quality advancement in
terms of automated and research applications in order to value for money for achieving good
quality public services. The development towards artificial intelligence has benefited lots of
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people because it lessens the time consumed by people for performing a particular task and man-
made robots and machines are used in solving a typical task within a short period of time (Zwalf,
Hodge and Alam, 2017).
 Advancement of Technology
As proposed by Ameyaw and Chan (2016), people getting more access to internet services utilize
the network and engage in many online jobs and earn money as a result economic growth rate
increases. The per-capita growth rate in income in the public sector improves the living standards
of people in various countries helps in substantial growth in the value for money. People with
help of internet and web services can communicate to so many people in other parts of the
world and number of subscribers who want to get benefited from internet facilities can use the
technologies in order to create several online video tutorials which helps in facilitating online
learning process (Overman and Van Thiel, 2016).
 Sound knowledge of entrepreneurship helps in improvement in economic growth
According to Zhang et al. (2018), there is no such possibility in the growth in business
development without a sound knowledge of entrepreneurship. The government in multiple
countries mainly emphasizes in certain industries like that in department of tourism,
development in electric power generating units which consists of a large share in the growth of
economic development. Countries are ready to take certain decisions in order to help the people
who want to open startup businesses therefore the government is ready to provide them a good
knowledge of how to be an entrepreneur and helping them with other financial support so that
they can carry on their business properly.
3.2 Several factors related to performance of value for money fail
There are several factors based on economic, those are related to falling down of value, which is
related to money (VMF). These major factors can be discussed in details as:
 Rates of interest
As proposed by Marsh (2017), this factor introducing the normal power of money is a particular
country’s rate of interest. Generally, rates of interest indicate the quantity it costs for taking
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money. This level of rate of interest is moved high to low by a particular central bank of country
to falling down the country’s economy.
Higher rates of interest indicate more valuable fee to take money however, the rates of lower
interest diminish the fee, and more access the credits that is cheap for an economy. The rates of
higher interest mean the demand for the medium of exchanges is higher. The rate of lower
interest means to fall down of demand for the medium of exchanges. It is compensated through
the rate of interest by a trader difference when the medium of exchange with the rate of high
interest bought by the trader rather the lower rate of interest of medium of exchanges.
 Inflation
This is an important factor based on economy indicates the rise in the cost of various goods or
services. In word of Brown (2016), the cost of goods or services are high defines the increasing
demand for those products. This may not good for a consumer. However, rising cost of products
indicates the positive development of a country and its economical structure. However, the price
of goods and services are falling down that is called deflation. This situation indicates the poor
economic infrastructure condition of a particular country.
Figure 2: Factors based on value of money
(Source: created by author)
 Economical growth
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As viewed by Locatelli et al. (2017), a higher rate of economic growth of a country means the
increasing demands for goods and services as well as batter job opportunities for people with
strong level of capitals as well as investments. A country's level of economic structure can
indicate by the gross product based on domestic (G.D.P). A negative rate of G.D.P indicates the
poor economy. The rates of falling down of G.D.P. occur due to lack of updated technology,
poverty. Those can reflect the factor of the valuation for money (Kerzner and Kerzner, 2017).
 Balance of current account
The last one is the balance of the current account. This is the entire amount of products and
services. As well as the income and the balance that is current of a state against its entire partners
of trading. A negative current balance indicates the country is taking more from the business
partners rather than the country's contribution. The entire amount related to trade can keep
impact the positive rates of exchange of a country if there is extra demand for goods and services
of the country from another country (Davis, 2017).
Here the assignment talks about the country, Oman. This country affected from the failing down
of the valuation for money. Many reasons are responsible for this issue. The country is facing
they poor economic infrastructure as well as the worker of the country are not technically sound
to cope up with new technology, that is the key element of the economic development of a
particular country. Through a case study, it is noticed that the literacy rate is not satisfactory in
Oman. This is the other main problem to develop a better rate of G.D.P as well as it helps to
increase the valuation for money (Kagiri and Wainaina, 2017).
3.3 Approach for mitigating failure factors
● Effective principles based on Management
As suggested by Alford (2016), a proper way of management, efficient utilization of
resources and marketing them lead to the success in the growth of small scale and medium
scale industries. Sometimes various issues arise therefore it debates the growth in the industries
which results in unemployment in the country. Development and growth of small as well
medium scale enterprises widen opportunities related to the operations in business as a result it
leads to efficient management and leading them with better support and financial guidance.
Small and medium scale industries that are alive in the country of Oman suffer lack of resources,
which would be able to meet a rise in demand of customers (Volden, 2019).
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Figure 3: Implication of Earned Value Management
(Source: Locatelli et al. 2017)
● Propound training
The enterprises may have a good strength of people working under the companies or sound
technical skills of each individual but the output of the company is so less that it leads to the
problem in expanding the businesses. There are certain fields upon which the government in
Oman have to look upon like developing modern ideas and technologies, reaching to more
number of customers and buyers so that it results in better economic flow in the society as well
as in the country.
● Competitive Marketing
As cited by Opoku, Guthrie and Ahmed (2018), there are certain solutions, which can minimize
the fail in the value for money related to the small scale and medium scale industries. Oman can
assign various specialists in operation as well as acquiring more number of buyers, well-
competitive marketing units that would lead to the well-developed plans and methods for growth
in the industries in Oman.
Methods enhancing the growth and development in small and medium scale industries
● Sound financial stability
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The development in financial stability in economic infrastructure, efficient utilization of labor
power, good managerial operations and sound knowledge of marketing field knowledge would
improve the valuation of money in the society (Alhava, Laine and Kiviniemi, 2015).
Issues associated with foreign currency in Oman and methods to resolve those issues
● There are certain problems related to monetary values in Oman for example sometimes
difficulty arouses in understanding the term called "Euro". The word euro refers to the
various bonds related to monetary transactions across the world. The bonds based on the
euro are signed with various foreign exchange departments leading to the monetary
transactions with the countries abroad.
● The issues based on the euro economy are dependent on trading businesses over a
particular good or service with a maturity period of at least two consecutive years.
Sometimes the issues related to euro sometimes are available at lower occupancy costs
however if the organizations to do not get enough opportunities to receive sufficient
details, it might lead to the mis-flow and mismanagement in cash flow chances therefore
they might run under severe loss conditions (Locatelli et al. 2017).
Based on information gained from Davis (2017), the bonds, which can be converted with respect
to the foreign currency, have certain unique features which make it more appealing to the people
who invest money in foreign sectors and the lenders of money who have to pay interests to the
banks. The conversion between bonds is a compilation of both a financial obligation and the
value of shares issued by the company. Therefore, it allows the companies and foreign traders to
make easy conversion between bonds and profitable shares.
3.4 Opportunities based on Value management
In words of Ameyaw and PC Chan (2016), value management requires strategic decisions which
required to be supported as well as providing best business benefits which requires being
combined the portfolios, the programs as well providing value management techniques. Another
form of opportunity that are based on managing value includes achieving sustainability process
that in turn aids in taking any form of strategic decision making process. In addition, another
opportunities that is based on Briefing process includes elimination of waste, identification of
non added form of value process along with pursuing continuous form of development. On
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another hand, this opportunity includes understanding level of value as it aids in building brand
value. VFM is important as this process aids in managing risk along with informing effective
decision undertaken by audit department. Key features of achievement of VFM include
Integration of value management along with managing risk involved with various form of
procurement routes.
Major vision of value management is based on the construction industry as it aims at realizing
value for both end users and all types of stakeholders. In addition, accelerating change report
generally builds work implemented on M4I and it is used for establishment of Rethinking
construction. Apart from that, this construction is identified as primary vehicle for both public
and private sector product in construction industry (Alhava, Laine and Kiviniemi, 2015).
4. Conclusion
Hence, it can be concluded that factors like better project models in the context of building
constructional projects gives various opportunities to better planning and executing such project
ideas which tend to provide a clear picture of achieving better performance of the valuation for
money. In addition, the public and private sectors ensure that they form teams together to
analyze the project performance and growth in industrial sectors. Moreover, online learning
methods enhance the literacy rate among the people therefore it helps in the increase in
manpower leading to the economic growth in the country.
5. Recommendation
 It can be recommended to Value Engineering sector as it was first proposed with the
product that can be produced using various ingredients.
 The concept of functions is to define the product by its functionality rather than
emphasizing on technical products. Use of disciplinary actions in regards to team
formation is to develop well-developed and comprehensive tasks.
 The recommendation can be provided to users to implement ratio comprising of the
satisfactions between the stakeholders’ needs including those items that are used to
ultimate gain of satisfaction.
 The authors nowadays have been exploring the concept of expansion of value
management which is used to stabilize, nullify the objections and inculcate creative ideas
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