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Executive Summary

Value for Money (VfM) considerations are an increasingly common requisite in humanitarian programmes. The UK’s Department for International Development (DFID) supports the adoption and scale-up of cash programming in humanitarian settings where appropriate, as both a more effective means for people to meet their basic needs in crisis, and a more cost-efficient modality than traditional forms of in-kind assistance. As part of its own VfM agenda, DFID would like to see whether INGOs, working through a consortium model, can scale to deliver cash assistance while demonstrating VfM. DFID have funded the Cash Consortium for Iraq (CCI) to respond in Iraq with MPCA, and to demonstrate VfM in their response.

The CCI was formed to better meet the needs of conflict-affected households by enhancing the impact of multi-purpose cash assistance (MPCA) through harmonisation, operational coordination, and expanded reach. The CCI is comprised of the International Rescue Committee (IRC), Danish Refugee Council (DRC), Norwegian Refugee Council (NRC), Oxfam, and Mercy Corps as lead agency. CCI partners provided approximately 25,000 vulnerable households with MPCA in 2015 and 2016. In 2017, the CCI scaled-up its operations to provide 30,000 vulnerable households with MPCA, and so far in 2018, 20,000 households have received MPCA. To date, the CCI has distributed one-off and multi-month transfers to over 75,000 households, or 450,000 individuals.

To undertake its VfM analysis (discussed in further detail in Section 3) the CCI took a distinct approach, while working within DFID’s ‘4Es’ framework. This framework encompasses cost-efficiency, economy, effectiveness, and cost-effectiveness. Cost-efficiency is the cost to provide an output, in this case MPCA.

Economy is securing the best possible price for inputs or resources. Effectiveness is how well those inputs are converted into outputs and outcomes. Cost-effectiveness is the cost per outcome.
To analyse cost-efficiency, the CCI partnered with IRC’s Best use of Resources (BUR) team. In 2016 the BUR team developed the Systematic Cost Analysis (SCAN) tool, which allows for comparable cost analysis of humanitarian programmes by analysing budgets or expenditure reports and calculating a cost-transfer ratio (CTR) – a now standard metric in cost analyses. The CCI opted to partner with the BUR team and use the SCAN tool because it a) would provide fast, comparable analysis of spending across the CCI, without the need to manually analyse budgets and expenditure reports, and b) allowed the CCI to leverage innovative internal resources and thus promote VFM.

Two SCAN analyses were conducted, first in February then August 2018. The first was a prospective analysis on the CCI-DFID budget, followed by a second analysis after 10 months of spending (Q3), using expenditure reports. To better understand how costs are allocated to different programme activities, the CCI’s Technical Working Group (TWG) and finance teams identified 7 programme activities and allocated proportions of every budgeted resource across each activity. The initial, prospective, CCI-wide CTR was £0.64. This means that for every £1 delivered to a beneficiary, it would cost the CCI £0.64.

After 10 months of spending, the CTR was £0.48, or £0.16 less than budgeted. The activity breakdown then shows what percentage of the £0.48 goes to different programme activities, such as preparing for distributions, distributions, and post-distribution monitoring (PDM). If the savings found after 10 months of spending are realigned to programmes, the final CTR by the end of the programme would be £0.53. This is detailed further in Section 4.

To analyse whether economy had been considered throughout the CCI-DFID programme, first the CCI-DFID budget vs. actual (BVA) up to Q3 was used to look at how spending had progressed against the largest noncash budget lines – staff and office costs. The processes associated with ensuring economy – thorough competitive tenders and market analysis – are in place across the CCI. A second level of analysis looked at the SCAN results and estimated the cost to the CCI of ensuring economy, i.e., what it costs to procure money transfer agents (MTAs) and verify payments. This was £0.08, or 16% of the CTR. This is discussed further in Section 5.

Multiple steps were taken to evaluate the CCI’s effectiveness. The first step was to develop an initial framework, with indicators, to assess effectiveness. Key informant interviews (KIIs) were then held with a range of internal and external stakeholders, to evidence the more qualitative indicators of effectiveness, complimented by a thorough desk review. This component of the study was conducted by Mercy Corps’ Regional Economic Opportunities Advisor. This data, which speaks to the CCI model, governance, and waysof-working, supports and helps to explain the quantitative indicators of effectiveness (i.e., the CCI’s results), which are captured in PDM and quarterly reports.

However the initial framework, while functional and rich in data, was thought too broad for a focused analysis. In September 2018, IRC’s Cash Relief Technical Advisor joined the project to support with producing the final report. Following a second desk review, the initial effectiveness work was reframed to align with the Cash Learning Partnership’s (CaLP) Operational Models (OM) Analytical Framework. This reframing allowed the analysis to focus on those areas or drivers of effectiveness that best inform and explain the CCI’s results. Within the OM drivers of effectiveness, 4 were selected that broadly explain how the CCI achieves outcomes: Strength of Inter-Agency Collaboration and Coordination Mechanisms, Targeting (Quality and Timing), Linkages to other forms of Assistance/Programmes, and Speed of Delivery.

Section 6 details what has been achieved under each area or driver of effectiveness, including measurable results, and what could be done to improve in each area. The key finding here is that the four drivers of effectiveness have enabled the CCI to deliver MPCA quickly, at scale, and with a targeting methodology that ensures the most vulnerable households receive assistance, while achieving effective referrals to legal and non-legal assistance.

Finally, the CCI’s overall VfM was analysed by returning to the activity breakdown developed during the costefficiency analysis, thereby linking costs to activities and ways-of-working to results and other indicators of effectiveness. Under the largest activity – Distributions – savings have been made through running larger distributions, without any measurable impact on effectiveness. Reducing fees paid to MTAs are discussed, including a potential move to delivering MPCA using mobile money. While this would reduce costs, MTA fees are themselves a very small portion of the budget, and the use of mobile money in the current context could impact on scale and accountability. In Preparing for Distributions, gains could be made through providing more comprehensive training to enumerators, as targeting is identified as a cost driver. However, retaining targeting methodology – PMT – is essential for programme effectiveness if the CCI is to maintain its evidence-based conception of vulnerability and initiate responsible transition to government systems through alignment with government targeting. Post-Distribution Activities are also a significant cost for the CCI, and here gains could be made by reducing both the duration of PDM and the frequency of PDM for multi-month transfers, from once per transfer (so 3 PDM surveys), to a ‘first and last transfer’ approach (2x surveys). Neither would significantly impact on effectiveness or accountability. These, as well as the remaining, less costly activity categories are analysed in greater detail in Section 7.

After a summary of the findings in Section 8, Section 9 the findings and recommendations are outlined in a VFM action plan, to be implemented throughout programme year 2.