To be able to monitor a project’s implementation and judge its performance against the objectives and targets set, it is necessary to use a set of indicators, which might be decided during the Planning Phase, so that data on them can be collected. Indicators are usually quantitative measures but may also be qualitative observations. They define how performance will be measured along a specific scale, without specifying a particular level of achievement. The various levels of indicators are as follows12 [ "Indicators for monitoring and evaluation"- European Commission -Directorate General XVI]:
| ● | Financial indicators are used to monitor progress in terms of the commitment and payment of the funds available for the project in relation to its cost. |
| ● | Output indicators relate to activity. They are measured in physical units (eg. Length of road constructed) |
| ● | Result indicators relate to the direct and immediate effect brought about by a project. They provide information on changes to, for example, the behaviour, capacity or performance of direct beneficiaries. Such indicators can be of a physical nature (reduction of journey times, number of successful trainees, number of road accidents etc) or of a financial nature (e.g. decrease in transportation cost) |
| ● | Impact indicators refer to the consequences of the project beyond the immediate effects on its direct beneficiaries (effects occurring after a certain lapse of time but which are nonetheless directly linked to the action taken). |
Financial and output indicators can be used to monitor the progress of a project while the result and impact indicators can be used to evaluate the project’s outcome at the post – project period.
Example 7-12: Possible indicators for a major infrastructure project (e.g. road construction)
|
Description |
Indicators |
Output |
Construction of road |
Implementation: Financial: cost Physical: km constructed |
Result |
Reduced journey time Reduced transport cost |
Time savings in min Cost saving (%) |
Specific impact |
Increased flows of persons and goods |
Traffic flows |
Using the indicators defined above, one can also measure concepts such as effectiveness and efficiency.
| ● | Effectiveness compares what has been done with what was originally planned i.e. it compares actual with expected or estimated outputs, results and/or impacts |
| ● | Efficiency looks at the ratio between the outputs, results and/or impacts and the inputs (particularly financial resources) used to achieve them. |
The Table that follows shows the complementarity between indicators and the measurement of effectiveness and efficiency.
Table 7-4: Complementarity between indicators and measurement of effectiveness and efficiency
|
Indicators |
Effectiveness |
Efficiency |
Operational objective |
Financial/ physical output |
Actual/planned output |
Output compared to cost |
Specific objective |
Result |
Actual/planned results |
Result compared to cost |
Global objective |
Impact |
Actual/planned impacts |
Impact compared to cost |
In order to plan the use of performance indicators both for monitoring the progress of the project and for evaluating it, the Project Manager has to follow the following steps: