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Jan 2016

Outcome costing: a significant advancement for determining public-sector effectiveness

The aim of this paper is to devise a methodology which can analyse, and therefore determine, whether value for money is being achieved by the public sector.

A key component in determining value-for-money, also known as cost-effectiveness, of an outcome is to know how much resource is allocated to its achievement. The strategic objective costing (SOC) model aggregates staff and non-salary cost allocations to calculate the total cost of an objective.

The aim of this paper is to devise a methodology which can analyse, and therefore determine, whether value for money is being achieved by the public sector.

Governments have had long-held ambitions to improve cost effectiveness and deliver value-for-money for their taxpayers. In recent times, focus has turned from outputs (activities) to outcomes (benefits). Moving to an outcomes-based focus has highlighted complex challenges in respect of definitions, coherent management frameworks, timescales and costing.

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Outcome costing: a significant advancement for determining public-sector effectiveness