Certified Government Financial Manager (CGFM) 2025 – 400 Free Practice Questions to Pass the Exam

A "cost-effectiveness" performance measure assesses the relationship between the costs incurred in a program and the outcomes it achieves. Specifically, it quantifies how much it costs to obtain a certain result or benefit from a program, allowing for comparison across various programs and initiatives. This metric is valuable for decision-makers, as it helps identify which programs deliver the best outcomes relative to their costs, guiding resource allocation toward the most effective solutions.

In this context, measuring the cost per outcome achieved is crucial because it focuses on the efficiency and value of services provided. It allows organizations to evaluate whether the benefits gained from a program justify the expenses involved, thus supporting budgetary decisions and performance evaluations. This is why the option detailing the cost per outcome as the performance measure is the most accurate reflection of "cost-effectiveness."

The other options do not effectively capture the essence of cost-effectiveness. Dividing overall service costs by the number of employees does not reflect program outcomes. Total expenditure on resources provides a financial snapshot but lacks a focus on performance outcomes. Lastly, expenses incurred in managing multiple programs also do not relate to the cost-effectiveness of specific outcomes achieved, limiting its relevance as a performance measure.