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ACCA Strategic Professional · Strategic Business Leader · Public sector governance

A city council runs a job-training programme. Last year it trained 800 people at a cost of $4.0m. This year it trained 1,000 people at a cost of $4.0m, but only 30% of graduates found work within a year, compared with 55% last year. Which assessment of value for money is most appropriate?

Efficiency improved but effectiveness deteriorated. Cost per trainee fell from $5,000 to $4,000, showing better use of resources for outputs, yet the share of graduates gaining employment fell from 55% to 30%, so the programme achieved less of its intended outcome.

  1. AEfficiency improved but effectiveness deterioratedCorrect
  2. BBoth efficiency and effectiveness improved
  3. CEconomy deteriorated but efficiency improved
  4. DEffectiveness improved but efficiency deteriorated

Explanation

Cost per person trained fell from $5,000 to $4,000, so efficiency improved. Employment outcomes fell from 55% to 30%, so the programme achieved less of its intended objective, meaning effectiveness fell. Judging success on output volume alone would wrongly suggest overall improvement.

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