Maximising Value: The Big Idea

Maximising Value

We all like to receive value, whether in public life or in private.  An accepted measure of Value is:

Benefits - Costs = Value

It makes sense therefore to spend our efforts on those things we value most.

Projects and procurements

The purpose of projects (including procurements) should therefore be to maximise Value. This can be achieved by minimising Cost, maximising Benefits, or both. BUT while minimizing Cost has a lower limit there is no upper limit when maximising Benefits.

If projects maximise Value then taxpayers will be happy and shareholders content that resources are being allocated effectively.

Suppliers

Suppliers understand that they have to demonstrate Benefits and show superior Value to be selected. But often Price is used as a proxy for Value when in fact it is merely part of the Cost.

Suppliers should be selected on the basis of the Value that they offer and not just on the basis of Price.