#Economic principle definition full
Closer relationships with partners and contractors are also crucial to ensure we are able to learn from and leverage their experience to deliver outcomes across the full set of DFAT's strategic objectives. At a strategic level, it requires that efficient systems are established to gather, collate and succinctly present empirical and qualitative evidence so that it can be utilised to inform contract and program management and as well as future management options. It requires DFAT to focus on learning from past experience to avoid adopting methods and approaches that have not been successful in the past. Evidence based decision making requires systematic, structured and rational approaches to decision making, framed around logical arguments informed by accurate analysis. Informed decisions build on and contribute to organisational learning, continuous improvement and overall effectiveness.
Principle 3: Evidence Based Decision MakingĮvidence based decision making at all levels is crucial to ensuring value for money. It also requires decision makers to encourage and use competitive selection processes when selecting partners and contractors. This means that decision makers must encourage a culture of contestability and the competition of ideas and alternative solutions when making investment decisions. Principle 2: Encouraging CompetitionĬompetition is central to value for money and requires DFAT to consider and compare competing methods and partners and to select the option that offers the optimal mix of costs and benefits. It requires consideration of the priority of the task, alternative ways of achieving it and the costs and benefits of different approaches. Cost is one critical aspect of the value for money equation, but value for money does not always mean choosing the lowest cost option. However, economy should not be pursued without consideration of the impact on effectiveness or efficiency. Decision makers should scrutinise programming costs throughout the investment lifecycle to ensure the most cost-effective options are pursued.
EconomyĬost-consciousness is central to value for money and requires DFAT to seek reasonable opportunities to reduce costs at every level of operations. We expect all our delivery partners to give effect to the principles and value for money performance is measured in our Aid Performance Framework. Building on these requirements DFAT has developed eight Value for Money Principles to guide decision making and maximise the impact of its investments. It is a requirement under the Public Governance, Performance and Accountability Act (2013) and the Commonwealth Procurement Rules. In principle, the approach to economic theory is divided into positive and normative.īelow are course units offered in this thematic areas.Achieving value for money is a critical consideration for the achievement of DFAT's strategic objectives. They are comprehensive system of assumptions, hypotheses, definitions and instructions what should be done in a certain economic situation.
#Economic principle definition how to
Economic theories try to explain economic phenomena, to interpret why and how the economy behaves and what is the best to solution - how to influence or to solve the economic phenomena.
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