ABSTRACT
This chapter defines value as a simple universal equation. Activity-Based Cost Management (ABC/M) provides a powerful means of cost assignment using cost drivers. A similar approach can also be applied for revenue, using revenue drivers. Effectiveness and efficiency are often used synonymously but are very different, and this misuse is the source of more confusion than just about anything else in both business and human endeavour. Value equation tells that from whichever stakeholder viewpoint we are looking, value is the difference between benefits and costs incurred to achieve them. The financial value of a programme is determined using investment appraisal techniques, the most powerful being Discounted Cash Flow (DCF) analysis. Internal Rate of Return (IRR), also referred to as the yield, is the discount rate at which the present value of future cash inflows equals that of cash outflows. The value is managed in the same way as if the Net Present Value (NPV) were positive.
