At one level, getting best value from the resources available to an institution should be an obvious management objective. Who would do otherwise? Yet governments of all parties have thought it necessary to seek improvements. But perhaps this is not surprising as most academics will be much more concerned about the quality, impact and reputation of their work than how much it costs or the value for money it provides. Therefore the governing body (along with its other financial responsibilities) has to ensure that its institution is achieving optimal value for money (VfM).
VfM is usually defined in three ways:
Whilst the first of these is a reasonably straightforward concept (given identical goods or services, pay as little as possible for them), the second and third may not be and balancing acts may be required. Research is a classic example, and maximising the volume of published papers in third rate journals is not the way towards international recognition of an institution as research driven. Likewise, a policy of publishing only in first rate journals regardless of the resource consumed may have the same effect, because either the research is not of sufficient quality to be published, or the magnitude of the resources required means that little is produced.
The reality is that getting better VfM needs regular pressure and it's the governing body's job (through the audit committee) to see that management takes the task seriously. VfM can be investigated through various routes – such as internal audit investigations, interviews with management, use of benchmarks - but should stop short of governors doing the job themselves. Here, as in many other aspects of governance, the job is to ensure that robust arrangements are in place, that they are functioning well, and that the results are measured and actions taken.
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Since the Guide was written HEFCE has produced fresh guidance on VfM.