MEASURING VALUE FOR MONEY IN PUBLIC LIBRARY COLLECTION DEVELOPMENT.
In recent years, the underlying philosophy behind public library collection development policies has moved from the repository model towards a more client focused model. Increasingly, public libraries are maintaining collection development policies which more accurately reflect user demands and taste. The bottom line has become the selection and purchase of items that users want to borrow. This has meant that collection development policies have had to be completely rewritten, with a greater depth of analysis and detail.
There has also been an increasing demand by local government to know whether its investment in library stock represents value for money.
This paper provides experimental benchmark calculations that attempt to evaluate collections in those terms. The calculations may be flawed and not cover all situations adequately, but they are an attempt to quantify an elusive concept. They are expressed in terms that can be applied to collections anywhere.
Value of money
Value for money is not a fixed point. Different materials represent different amounts on a monetary scale in terms of the value of their return. What has been done is to define a benchmark--the value for money indicator--appropriate to individual library services. The aim of implementing the value for money indicator is to move the collection, or part thereof, towards this benchmark over time as a justification for the directions established in the collection development policy. The benchmark represents an achievable ideal, against which the relative value of any item or collection can be positioned.
As an adjunct to this, a spinoff benchmark--the item replacement threshold--seeks to define a point at which a popular stock item should be considered for replacement. In addition there is the beginning of an attempt to define the monetary value of library stock to the community, represented as a cost saving incurred with each loan.
Establishing raw base line data
The first stage in determining the value for money of library stock purchases is to establish a set of base line data. This data will vary for each library service, but is used to establish an internal benchmarking system that can be applied in a variety of circumstances. One of the assumptions made is that the circulation of stock is a measure of library usage. This means that the lending stock `carries' the nonlending stock, that the existence of nonlending material is really a function of the performance of the lending stock.
Therefore the formulae can be used to evaluate an entire collection and an entire stock budget without the complicating factor of nonlending material. Having said that, depending on the way the base line data is defined, it is possible to evaluate only the lending stock (with the lending stock section of the budget) or even a subset of the collection ie the video collection and the video budget.
The base line data consists of the following elements
* number of acquisitions per year, represented as a
* stock budget per year, represented as b
* number of loans, represented as l
* loan period in weeks, represented as p
The first calculation that can be made from this data is the average cost of an item. This figure is also included in the base line data, and is represented by the formula c=b/a
For example, Sample City Library spends $330,000 per year on library stock, allocated for this purpose by its council. With this money it purchases 15,714 items. Therefore the average cost of an item for this library is calculated to be approximately $21.00 per item. An additional factor which is introduced at the base line level is depreciation. It has been assumed that stock depreciates at a rate of 20% per year.
Therefore items which are 5 years or more old are assumed, for replacement purposes, to have nil or negligible value. This essentially means that the valuable life of an item, or of council's investment in that item, is 5 years. It is therefore important to achieve an optimum number of loans during that 5 year period in order to represent the best value for money for council's investment.
Optimum loan threshold
The optimum loan threshold number is the point where the number of loans (l) is equal to the maximum number of loan periods for the individual library per year.
For example, as there are 52 weeks in a year and Sample City Library has a three week loan period, then the optimum loan threshold is 17.3 loans per year. This means that for an item to be always on loan for one year, it would be lent 17.3 times. Therefore this is the optimum loan threshold for an item, and as such it is unrealistic to expect a significant number of items to exceed this number of loans in a year.
The optimum loan threshold ([l.sub.o]) follows the formula [l.sub.o] = 52/p
The optimum loan threshold number was set as a benchmark against which the loan performance of items could be measured. However, in doing so it was understood that only in exceptional circumstances was an item likely to achieve the optimum loan threshold in one year. The view was then taken that items purchased should have achieved the optimum number of loans in a 5 year period ie the period in which the item has not depreciated to a nil value. This means that an item should have been on loan for the equivalent of one year during its first 5 years in the collection. Therefore, the optimum loan threshold is the ideal number of loans an item should achieve over a 5 year period.
Calculating value for money
Value for money, in library collection terms, means that each item purchased attains the highest number of loans possible. This can be understood simply by reasoning that the more times an item is lent, the greater value ie lesser actual cost that item is both to users and to the council. The purpose, then, in a public library sense, is to avoid the purchase of items which are not going to be borrowed ie do not satisfy user demand.
Value for money ([v.sub.m]) can be seen as the cost per loan of an item, which is calculated using the formula [v.sub.m] = c/l.
For example, at Sample City Library c = $21.00
* therefore, if the average item costs $21.00, and it is lent once, that loan has a value of $21.00
* if the same item is then lent a second time, the value of the loans are $10.50 each ie c/l
* if the same item is then lent a third time, the value of the loans are $7.00 each ie c/l
The more loans an item has, the better the expenditure of council resources, and the greater the value derived from each loan of the item. The more the value for money ([v.sub.m]) amount decreases, the greater the value the item is said to have in contributing to the library collection. Given the fact that not all items are going to be lent equally well, an optimum loan threshold was calculated as a benchmark figure against which all stock items could be measured.
Calculating the value for money indicator: setting the library's benchmark
If it is assumed that an item should reach the optimum loan threshold ([l.sub.o]) within 5 years, (17.3 in our example) then the dollar value of these loans, in value for money terms, follows the formula c/[l.sub.o], or $21.00 divided by 17.3 loans. This gives a value for money indicator ([v.sub.m]) of approximately $1.21 per loan.
This amount was selected as the benchmark because it describes the desired value for money amount to be reached by the collections at Sample City Library. This means that the purchase of an item can be said to be good value for money if the indicator ([v.sub.m]) is equal to or less than $1.21 (for Sample City Library).
In general terms, the value for money indicator can be calculated using the formula [v.sub.m] = c/[l.sub.o]
The value for money of any selection of items can thus be calculated using the [v.sub.m] = c/l formula, and measured against the benchmark for the library's whole collection, or the part of the library's collection to which the selection being measured belongs. For example, Sample City Library has a benchmark for its entire collection of $1.21 that represents the point at which value for money ideally starts. An analysis of 77 adult fiction authors it acquires on standing order reveals that these authors have an average of 41.12 loans per item.
Therefore the value for money indicator for this selection is $0.51 per item, representing greater value for money than the benchmarked ideal. However, if Sample City Library analyses its entire collection and discovers that all items regardless of format have an average of 5.76 loans, then the collection as a whole has a value for money indicator of $3.65 per item. When compared to the $21.00 average cost of an item this is remarkably good, but more circulation of stock, or perhaps more refined acquisition, will be required to bring this closer to the benchmark.
Item replacement threshold
In addition, an item replacement threshold can be calculated to provide a benchmark for the removal and replacement of high turnover stock.
The replacement threshold ([r.sub.5]) for an item during a five year period follows the formula [r.sub.5] = 52 x 5/p.
For Sample City Library, this works out at 17.3 x 5, or 86.5 loans in 5 years.
It was understood that only in exceptional circumstances was an item likely to achieve the replacement threshold in 5 years. The view was then taken that items purchased should have achieved the replacement threshold during their lifetime. The replacement threshold is a benchmark to define the point at which an item should be withdrawn from stock and replaced with a new copy.
For Sample City Library, then, if an item reaches 87 loans during its lifetime (regardless of how long it had been in the collection) a new copy, or similar title, should be purchased to replace it but depending on other deselection criteria, especially currency and accuracy of information.
To what purposes can these formulae be applied?
Once a selection of stock has been analysed in terms of its value for money relative to the benchmark, what tangible implications does this have for collection development as a whole, and how can it be used to influence library practices? Some of the results of a conducting such an analysis could be
* Evaluation of the selection criteria In order to bring collections and stock closer to the library benchmark figure, it may be necessary to review why and how stock is selected to bring it more in line with user demand
* Evaluation of the collection development policy The philosophical position described in the library's collection development policy will directly influence value for money. In libraries with a repository, archival or similar function there would be a reflection in the value for money indicator showing that they are somewhat different from the benchmark. Libraries with a strong user focus, supplying in demand stock, should find this attitude reflected in their value for money indicator, showing amounts which approach or exceed the benchmark
* Promotion and marketing of underperforming sections of the library One innovative byproduct of this analysis might be that the library identifies particular under performing collections or resources with a view to promoting them to encourage greater circulation
* Weeding of stock which is irrelevant to user demand The analysis of particular sections of a library collection might indicate that particular areas of the library are inherently unpopular, regardless of promotional or other efforts
* Evaluation of standing orders Analysis of standing orders eg standing order fiction authors, may provide a basis for reviewing the inclusion of titles / authors on standing order, or that the quantity of each title received on standing order needs modifying
* Evaluation of sections of a library collection Since the formulae can be applied to an entire collection, it follows that they can be also used to analyse sections of a collection. This could be a specific collection eg children's fiction, a specific format collection eg videos, a particular author's works eg adult fiction standing orders, or the stock in a particular subject area. However the base line data will need to accurately reflect the section being analysed
Value to the community
The flip side to these calculations is that they can help to quantify, albeit roughly, the value to the community of the library stock. While council will have spent a certain amount on library stock, it does so for the benefit of the community. How, then, can this benefit be measured, particularly in monetary terms?
If Sample City Council spends $21.00 on an item, and it is borrowed once, then the community has spent $21.00 on the item, but it has also saved the $21.00 (users do not have to purchase it themselves). The net gain or loss is $0.
If Sample City Council spends $21.00 (c) on an item, and it is borrowed twice (l), then the community has spent $21.00 on the item, but it has saved $42.00 (c x l). The net saving is $42 - $21, or $21.00. The library item, then, can be seen to represent a value of $21.00 to the community.
If this pattern is expanded to l number of loans, then the value to the community ([v.sub.c]) of an item, a collection, or a part of a collection is represented by the formula [v.sub.c]=(c x l) - c
Therefore, if an item is lent to the optimum loan threshold ([l.sub.o]), in the Sample City case 17.3 times, then the value to the community, or net saving to the community is ($21 x 17.3) - $21, or $342.30 per item. This means that for its $21.00 investment, council has had $342.30 value return from the purchase.
As libraries move towards meeting an increased demand for data with which librarians can adequately evaluate their services, more refinement and elegance is going to be required. The calculations presented are a beginning, broad, framework within which librarians can start to quantify and report value for money to their users and to their councils. The benchmarks and calculations can be debated, refined, and be made more complex. However they can provide a springboard from which public libraries can reasonably answer any questions regarding the value of their collection development decisions.
John Stanton BA (Syd) GradDipAppSci (Information) (UTS) has held a number of positions over a ten year career in public libraries in NSW. Currently he is Content Librarian at Baulkham Hills Shire Library, responsible for the overall selection, maintenance, merchandising and acquisition of all library physical stock and electronic source. John is also responsible for coordination of information and reference services, and for the development of an internet presence for the virtual library. His areas of greatest interest are collection development and staff training in the provision of information services. Address: Baulkham Hills Shire Library Railway Street Baulkham Hills NSW 2153 tel(02)96863798 fax(02)96862891 firstname.lastname@example.org
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|Publication:||Australasian Public Libraries and Information Services|
|Date:||Jun 1, 2001|
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