IFC's Evaluation Framework

IFC uses the Development Outcome Tracking System (DOTS) to monitor the development effectiveness of our investments. DOTS includes:

• An overall development outcome rating, that is assigned to every project in our portfolio at least once a year
• Industry-specific standard indicators that measure the development reach of our investments on stakeholders

Assessing Overall Development Outcome
The overall assessment of a project’s development outcome is based on four performance components: financial, economic, and environmental and social performance, as well as broader private sector development impacts.

The overall development outcome rating, rated on a 6-point scale from Highly Successful (1) to Highly Unsuccessful (6), is a synthesis of each of the four performance components. The components in turn receive a rating from "excellent"’ to "unsatisfactory," largely depending on whether they have achieved our standards for each performance dimension, as well as their development objectives articulated through specific, benchmarked departmental indicators.

Professional judgment is used when rating project performance: our investments operate in dynamic environments, and not all relevant impacts can be foreseen at the outset. We have specific evaluation standards that build on those of IFC’s Independent Evaluation group for financial and non-financial sector projects and that guide us to assign the appropriate rating.

IFC’s overall development success rate is the proportion of projects with high development among all rated projects. IFC typically reports on a rolling time slice of all active projects in our portfolio. In FY09, we reported on approvals from 2000 to 2005. We do not report on older projects, since they are less relevant for today’s operations, and many have closed already. We also do not report on newer projects, since they are too immature to be reliable. In FY09, 71 percent of IFC’s projects were rated high with respect to development outcome. The remaining 29 percent did not meet our standards.

How does a project earn a high development rating?
More about our evaluation framework in detail...

Standard Indicators: Industry-specific and corporate
Each IFC industry department has identified a number of standard, industry-specific indicators that capture the typical development impacts. In addition, we have some IFC-wide corporate indicators that are mandatory for tracking particular impacts related to environmental and social improvements and corporate governance issues. Standard indicators allow IFC to aggregate the development reach by sector or region and across the Corporation as a whole, and to compare performance. As we accumulate data on an annual basis, we are now also able to report on change over time.
Development Reach Table
More about our indicators.

Building on Established Good Practice
Our framework for measuring development results is closely aligned with IFC’s ex-post evaluation framework developed by IFC’s Independent Evaluation Group (IEG). It is also consistent with good practice standards that have been agreed upon among a group of multilateral development banks – the Evaluation Cooperation Group - for evaluating private sector development activities.

IFC’s Independent Evaluation Group (IEG)
IEG has analyzed IFC’s development results for over 10 years and in 2007 published a 10–year review. Unlike DOTS which covers the entire active portfolio, IEG assesses development impact for a random sample of projects, either active or closed at the time of evaluation, that have reached operational maturity. The evaluation framework for both DOTS and these in-depth project evaluations, “expanded project supervision reports,” are aligned and the findings complement one another. We use IEG results data to benchmark and complement DOTS results for specific sectors, regions, or IFC as a whole.