Magazine article Government Finance Review

Making Measures Meaningful: The Logical Framework Approach: The Logical Framework Approach to Program Analysis Can Improve the Quality of Performance Measurement in Financial Reports through Identifying the Logic in Program Design and Assessing Associated Risk

Magazine article Government Finance Review

Making Measures Meaningful: The Logical Framework Approach: The Logical Framework Approach to Program Analysis Can Improve the Quality of Performance Measurement in Financial Reports through Identifying the Logic in Program Design and Assessing Associated Risk

Article excerpt

The use of performance measures in financial documentation has become commonplace, even recommended, for showing skeptical taxpayers that their money is well spent. This is increasingly important as fiscal distress deepens and governments reconsider what services are provided. When there is not enough money to do everything, governments have to find a way to decide what to do, and performance measures can help.

There are two major challenges, however. The first is finding relevant and appropriate performance measures. Too often, what can be measured easily is not relevant to program results, and measures of activity (such as the number of people trained) are substituted for outcome-based measures (such as reduced poverty). Without a direct tie-in to the logic that underpins a program, many indicators fall into the "so what?" category--even if targets are met, there is no assurance that the program is successful. The second challenge is the result of implementing programs in an uncertain world. Outside factors affect results and can cause a well-designed program to fail. Activities and outputs can usually be controlled, but results--the desired changes--are subject to real-world risk, which often isn't adequately accounted for in program design or communicated clearly to stakeholders.

Local governments in other parts of the world have adopted a useful standard for dealing with this issue: the logical framework approach, or "logframe" for short. A logframe is a method of setting out program logic, performance measures, and assumptions in one integrated table, a simple way of demonstrating that measures are relevant, appropriate, and linked to the overall success of a program. Richard Boyle, with the Institute for Public Administration in Dublin, lists a key attribute of good performance measurement design as "a consistent, comparable, and structured approach to underpin the indicators reported." (1) The simple process of developing a logframe is valuable in improving communication between a program's implementers and stakeholders; according to the World Bank, using a logframe results in "common understanding and better communication between decision makers, managers, and other parties." (2)

PROGRAM LOGIC

Performance measurement ideally begins with an understanding of the logic that underpins a program: how its activities--what happens day-to-day --and its outputs--what the program produces--are linked to results in the community. One tool commonly used for this is the logic model, a simple table in which the first column lists the activities within the program; the second, outputs; and then short- and long-term results. Although it is read from left to right, using "if-then" logic, a logic model is developed from right to left, beginning with the long-term outcome, or the reason for the program. Next comes the short-term outcome needed to achieve it, then the output needed to achieve the short-term outcome, and so on? Exhibit 1 shows an example of a very simple logic model for a jail literacy program.

Although effective, the logic model has limits. The basic logic can be very well described but not necessarily link up with performance measures (some models list measures below each of the columns) or an analysis of any associated risks. As a consequence, it becomes difficult to link outputs to outcomes, or to tie what a program produces to its near-term effect in the outside world with a high degree of confidence. But this linkage is critical: Without a detailed risk analysis, the assumption that a result will occur may be a mere leap of faith.

THE LOGICAL FRAMEWORK

While building on the advantages of the logic model, the logical framework addresses these shortcomings directly. Originally developed by the U.S. Agency for International Development, it now a standard in the European Union, with numerous development agencies and with the World Bank. (4) Although developed as project evaluation tool, it is also directly applicable to program evaluation. …

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