Indicator development is the next core activity that follows from the definition of the ToC. Indicators guide data collection, analysis, reporting and dissemination of evidence (Kusek and Rist, 2004[24]), hereby enabling organisations to accurately monitor and report on how an intervention is performing (OECD, 2023[18]).
Indicators (quantitative and/or qualitative) should be developed for each level of the ToC, as they will inform on progress related to inputs, activities, outputs, outcomes, and impacts (Kusek and Rist, 2004[24]). The set of indicators should provide a comprehensive picture of the intervention’s progress and effectiveness. Indicators should be well-defined, directly linked to the intervention, and measured periodically, with specified measurement units. Regularly tracking indicators enables decision makers to understand the performance of the intervention, identify any deviations from the expected performance, and adjust if needed. If indicators are not on track, it prompts reflection on implementation strategies, the suitability and effectiveness of interventions, and even the appropriateness of selected indicators and targets themselves (European Commission, 2021[25]; 2021[26]).
When developing the set of indicators, it is important to consider the following methodological guidelines:
Define “SMART” indicators (World Bank, 2012[19]), meaning indicators that are:
Specific: Clear, direct, as unambiguous as possible; reflecting simple information that is communicable and easily understood.
Measurable: Objectively verifiable.
Achievable: Achievable and sensitive to change during the lifespan of the intervention.
Relevant: Reflecting information that is relevant to the intervention, and likely to be used by managers and decision makers.
Time bound: Trackable at a desired frequency for a set period.
Select an appropriate number of indicators, considering the costs of data collection and processing, and their added value in terms of informative capacity. There must be a balance between the need to monitor all aspects of the intervention and the potential drawbacks of having too many indicators.
Consider the feasibility of data collection. If data collection is too burdensome, it might lead to inconsistent or incomplete information. Monitoring should start with straightforward, quantifiable variables. Complementary qualitative information is key, but its acquisition and measurement are more complex and time‑intensive due to the involvement of subjective judgments and perceptions.
Ensure traceability and comparability over time and potentially with other interventions, facilitating consistency and learning. When available, baseline data serve as a reference for comparison, facilitating a more accurate assessment of the effectiveness of the intervention. Indicators that reflect both short- and long-term impacts contribute to ensure a long-term perspective in M&E.
Employ proxy (indirect) indicators thoughtfully, only when direct indicators lack data or regular collection is impractical. While helpful in tracking the desired outcome, proxy indicators might be influenced by other factors, making it challenging to attribute changes solely to the intervention.