Page 187 - BA2 Integrated Workbook STUDENT 2018

Preparing accounts and reports for management

2.6 The 3Es

The 3Es concept is also known as the value for money (VFM) concept. This has
been developed as a useful means of assessing performance in an organisation
which is not seeking profit.

The value for money in these organisations is measured through the 3Es, as follows:

Economy (an input measure). This measures the relationship between money spent
and the inputs.

Efficiency (link inputs with outputs). This measures whether the maximum output is
being achieved from the resources used.

Effectiveness (links outputs with objectives). This measures to what extent the
outputs generated achieve the objectives of the organisation.

Illustrations and further practice

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