IFC’s Development Outcome Tracking System (DOTS)

DOTS – A new system for tracking IFC's development results...
IFC established DOTS to track the development results of all our active operations continuously throughout their project lives. This systematic tracking allows us to monitor projects, learn from what does and does not work, and improve our performance. DOTS encompasses results measurement for investments and advisory services.

…building on a history of in-depth evaluations
Prior to launching DOTS in 2005, IFC already assessed development results ex-post through in-depth evaluations of a random sample of investment projects. IFC’s Independent Evaluation Group (IEG) chose the investment projects and reviewed evaluations carried out by IFC staff independently. Using a similar evaluation framework, DOTS has enhanced IFC's results measurement agenda by both expanding the evaluation scope to the entire active portfolio and shortening the lag time for evaluation.

More about our evaluation framework.

How it works:
Results tracking has been increasingly integrated into IFC's work: at every step in new business development, project implementation, and supervision, project teams are required to use DOTS to articulate expectations, identify indicators and benchmarks, monitor progress, and rate the project’s development outcome when appropriate. The main activities that are recorded in DOTS are as follows:

1) Identifying indicators up front
At the outset of a project, our multidisciplinary project teams (investment officers, environmental and social specialists, economists, and others) identify clear indicators to capture the project’s desired development impacts against specific targets and timelines. We have standardized these indicators by sector to allow for better comparisons and analysis. Progress is then tracked throughout the project cycle, at least once a year.

2) Rating project performance throughout
Each year, our project teams measure and rate the achievement of the specific indicators against benchmarks and timelines. In addition, a rating is assigned for the project’s four performance areas (financial, economic, environmental and social performance, private sector development impacts). Finally, the project team assigns an overall development outcome rating to each project, which is a synthesis rating.

The performance ratings reflect the professional judgment of our staff: the reality of any of our projects is complex and the parameters that influence a project’s rating are varied. There are some basic benchmarks that always apply for a project to earn high ratings:

• Financial performance: projects need to yield a financial return in excess of their weighted average cost of capital.
• Economic performance: projects need to generate benefits to society beyond those generated to financiers of the project, generally an economic rate of return of over 10 percent. Not all benefits are easily valued in dollar terms, and we equally consider qualitative aspects in this rating.
• Environmental and social performance: projects have to meet IFC’s environmental and social performance standards. We also consider a client’s performance improvements in how they manage their environmental and social performance.
• Private sector development impact: projects need to improve the condition of the private sector, which can be measured, for example, through the number of follow-up investments by other private sector companies in the sector in which IFC has invested.