Methods for evaluating efficiency in development cooperation

Development policy is under pressure. Shrinking resources are confronted with growing challenges. This further increases the importance of the efficient use of development funds. Evaluations are used for examining the efficiency of development interventions and for making recommendations to enhance their success. However, assessing efficiency is among the more demanding tasks in evaluation. The aim in this discussion paper is to support the evaluation of efficiency. To this end, the paper considers different understandings of efficiency – as an evaluation criterion, in the context of auditing and in welfare and health economics – and presents a methods catalogue for evaluating the efficiency of development projects and programmes, structured along various features. The methods catalogue is structured according to the purpose or interest of evaluations: methods designed to compare the efficiency of different interventions and methods designed to evaluate efficiency improvement potentials within a single intervention. Overall, the catalogue comprises 13 methods or groups of methods, including well-established methods, such as cost-benefit analysis, cost-effectiveness analysis and benchmarking of unit costs, as well as less established methods, such as social return on investment, systematic screening approaches and structured expert judgement. To meet the growing demands on evaluating efficiency, we call on commissioners and evaluators to make use of the full breadth of methods outlined in the catalogue. The discussion paper brings together the necessary action-oriented foundations for this purpose by providing guidance on the selection of methods and reflecting on their strengths and limitations. Through the informed and targeted application of methods, the efficiency and utility of evaluation can be enhanced.