Beyond 'Make' or 'Buy': Evaluating Value-for-Money in Public Service Delivery

Mehdi Shiva, Clare FitzGerald, Eleanor Carter, Mara Airoldi

Research output: Contribution to journalArticlepeer-review

Abstract

Outsourcing of public services is under heightened scrutiny. Public managers are asked to conduct thorough ‘make or buy’ assessments to help assure deliverability, affordability and value for money of public services. The naivety of this request dramatically overlooks the subtlety and challenge faced by public managers. In this paper we connect a range of differently configured contractual agreements to underlying components of ‘value for money’, namely, the pursuit of economy, efficiency and effectiveness. We set out a framework consisting of conceptual models and the corresponding decision tree to allow comparison across alternative sourcing strategies, considering both the associated transaction costs and transaction benefits. We also use simulation methods to capture uncertainty while establishing the practicality of the framework. This study advocates for moving beyond the polarized ‘make or buy’ debate with more instrumental considerations of ‘how to buy’ from the perspective of the public manager.
Original languageEnglish
JournalANNALS OF PUBLIC AND COOPERATIVE ECONOMICS
Early online date2 Mar 2024
Publication statusE-pub ahead of print - 2 Mar 2024

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