DFID’s approach to value for money in programme and portfolio management

Review

This review was published in February. Though it was not rated, ICAI made five recommendations, and found that the Department for International Development’s approach to value for money was helping to make UK aid spending go further, but improvements are still needed.

Findings

This review found that DFID has strengthened its processes and systems for ensuring it gains maximum value for each pound spent, has taken swift remedial action to tackle under-performing programmes, and has become a strong global champion on value for money. The review also found that DFID has been diligent in its efforts to cut waste, detect fraud, and improve efficiency, and that this work is improving the return on the UK investment in aid.

However, the review found that DFID’s approach was not adequately reporting and capturing results and value for money at the country portfolio level, or how programmes work together to deliver lasting impact, including reducing future dependency on aid.

It also found that weakness in the annual review process could undermine DFID’s approach to value for money. It found that targets were frequently revised, and that there could be pressures for optimistic scoring of programmes.

Recommendations

Based on this review, we made the following five recommendations to help DFID improve its approach to value for money still further:

1. DFID country offices should articulate cross-cutting value for money objectives at the country portfolio level, and should report periodically on progress at that level.
2. Drawing on its experience with introducing adaptive programming, DFID should encourage programmes to experiment with different ways of delivering results more cost-effectively, particularly for more complex programming.
3. DFID should ensure that principles of development effectiveness – such as ensuring partner country leadership, building national capacity and empowering beneficiaries – are more explicit in its value for money approach. Programmes should reflect these principles in their value for money frameworks, and where appropriate incorporate qualitative indicators of progress at that level.
4. DFID should be more explicit about the assumptions underlying the economic case in its business cases, and ensure that these are taken into account in programme monitoring. Delivery plans should specify points in the programme cycle when the economic case should be fully reassessed. Senior responsible owners should also determine whether a reassessment is needed following material changes in the programme, results targets or context.
5. Annual review scores should include an assessment of whether programmes are likely to achieve their intended outcomes in a cost-effective way. DFID should consider introducing further quality assurance into the setting and adjustment of logframe targets.