Written by: Northern Territory Government

‘Value for Money’ is often seen as the optimal combination for cost, quality and sustainability within a procurement setting. When all three elements are met ‘Value for Money’ is achieved.

However, the term ‘money’ can place a sharp focus on the cost of a procurement activity and overshadow the other key requirements.

The focus on the term ‘money’ can lead procurement panels to determine the best ‘Value for Money’ is the tender that is lowest cost. However, this is not always the case.

In 2017, the Northern Territory Government delivered a package of procurement reforms that moved away from ‘Value for Money’ and towards ‘Value for Territory’. This change acknowledges procurement is much broader than just price.

The value is for the Territory; the people, the economy, and the industries operating within it. With this comes a new challenge of defining what Value for Territory looks like and how to achieve it.

The NT Government has a framework for assessing Value for Territory, which ensures appropriate weighting is placed on key local considerations such as industry development, Aboriginal employment, supply chain stability and sustainability.

While ‘Value for Money’ remains a fundamental concept in procurement, it’s crucial to recognise its limitations with being framed around cost.

The shift towards broader considerations, as exemplified by the transition to Value for Territory in the Northern Territory, underscores the need to prioritise holistic outcomes that benefit not just the bottom line, but also the community, economy, and environment.

Embracing this shift opens doors to innovative approaches in procurement, where diverse factors such as local development, social impact, and sustainability are given due weight.

As we continue to refine our understanding of Value for Money, let us also strive to elevate Value for Our Community as a guiding principle, ensuring that our procurement practices truly serve the best interests of all stakeholders involved.


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