MCCs approach to assessing progress and measuring results has three phases: (1) pre-investment analyses, (2) monitoring and assessment during implementation, and (3) post-implementation evaluation. As part of each phase, quantitative data are collected and analyzed so that in-country and MCC staff can identify problems, assess alternatives, track progress, and measure results. MCC requires countries to identify baselines, as well as outcome and impact indicators, from the beginning of a proposed project, starting from the pre-investment phase. These become part of the performance indicators that MCC uses to track progress on a given project.
MCC creates incentives for countries to respond to these data requirements by providing funds for monitoring and evaluation. MCC works closely with MCAs and the institutions responsible for implementing the program to develop a Monitoring and Evaluation (M&E) plan. MCC requires that every compact include a formal M&E plan, making this management tool a core part of the bilateral agreement. MCC also does not release subsequent disbursements until adequate documentation is provided that previous funds have been spent and relevant milestones have been met, as delineated in the M&E plan.
The cost-benefit models developed earlier in the compact development process are also used to inform M&E plans. These models include an accounting of costs for each activity during the length of the compact, provide implementation timelines, and define the important milestones and deliverables. This connection between cost-benefit analyses and the M&E plan is crucial in the performance measurement framework, since both MCC and the compact country have accepted the cost-benefit models prior to funding and have agreed to implementation and measurement according to the assumptions in the model.
MCC has highlighted the importance of rigorous impact evaluation in quantifying performance gains and determining which partner country investments are most effectively helping to reduce poverty through growth. Given the difficulty and expense of rigorous impact evaluations, however, MCC carefully examines the use of funds for conducting such studies. In doing this, MCC considers three factors: (1) the need for information, (2) the learning potential from the evaluation, and (3) the cost and feasibility of conducting the impact evaluation. MCC works extensively with national statistics agencies, research institutions, and other domestic data collection agencies, such as universities, to collect and refine indicator data for use in its performance assessments and results-based management framework. Although MCC has begun impact evaluations in several compact countries, none has yet been completed.