The Value for Money Concept in Investment Evaluation: Deconstructing its Meaning for Better Decision Making

Abstract

The term “value for money” (VFM) is a poorly understood concept in practice. There is a lack of clarity in its application, especially in the distinction between “value” and “money” when assessing VFM in investment evaluation and decision making. This article clarifies the ambiguities in VFM by conceptually deconstructing its meaning using a “value triangle model” and, on that basis, we propose a six-step VFM assessment procedure, which has been tested during VFM workshops on infrastructure projects. Departing from the existing concept of value in value management and value engineering literature, the value triangle model rests on Daniel Bernoulli’s concept of value as captured in his famous..