The resources available to the community are limited, and are generally considered to beinsufficient to provide all the goods and services which individuals or groups might want.As a community, therefore, it is important to try to allocate these scarce resources so as toachieve the greatest overall satisfaction. Colloquially this might be expressed as gettingthe "best value for money".In many areas of the economy the market mechanism promotes and facilitates efficientresource usage. Most government activities, however, are not subject to the marketmechanism and other approaches are necessary to indicate to the public, Cabinet andParliament the value for money of these activities. Evaluation performs this role.Just as business managers consider new investment proposals and review existingpriorities in relation to their impact on business goals, new expenditure proposals andcurrent programs of Commonwealth agencies sshould be evaluated in the light of their impact on Government goals.Evaluation is a key element of the Government's budgetary and financial reforms asexpressed in its Policy Paper on Budget Reform (April 1984). The Government's statedaims are:. to develop better means of identifying and setting budgetary priorities, in order toensure that the best overall result is achieved in terms of meeting theGovernment's objectives with the resources which can be made available;. to focus attention more clearly on the goals and objectives of particular programs,in relation to the resources they use;. to develop and apply to the management of Commonwealth programs specifictechniques aimed at improved performance and more efficient resource use; and. to set up machinery to ensure that the effectiveness and efficiency of programs arereviewed regularly, and that the results of such reviews are taken into account inthe ongoing evaluation of budgetary priorities."The Financial Management Improvement Program and Program Budgeting are currentlythe key vehicles for focussing attention on the importance of evaluation.This Handbook was prepared primarily by the FMIP Unit in the Department of Finance.The Handbook draws on the experience of other governmental agencies in addressing theevaluation of programs, including Commonwealth Government specialist evaluationunits such as the Bureau of Transport Economics and the former Bureau of LabourMarket Research, Victorian and NSW State Government agencies, the CanadianTreasury Board, the US General Accounting Office and the OECD. Professionalevaluators and others, both within and outside the Commonwealth Government, haveprovided valuable comments on early drafts.