Category Archives: Learning from WASH Results

Can Payment by Results raise the bar for downward accountability?

Payment by Results (PBR) could encourage downward accountability if verification included beneficiary feedback that was linked to payment.

One of the criticisms levelled at PBR is that it promotes upward accountability to donors rather than downward accountability to beneficiaries. Members of the Monitoring and Verification (MV) team for the WASH Results Programme recently discussed whether this reflects their experience and what role there is for beneficiary feedback in verification processes and in this post we summarise those discussions.

The MV team agreed that upward accountability is not necessarily any worse in PBR programmes than in other funding modalities. In fact, the feeling was that the scale of verification is likely to provide a more accurate picture of what is happening across programmes than the not necessarily representative glossy human interest pieces that often emerge from grant funded programmes. Indeed, if verification was designed to include beneficiary feedback and this was linked to payment, PBR could actually generate more downward accountability than other funding modalities.

However it is this link between beneficiary feedback and payment that is challenging. Data needs to be unambiguously verifiable which limits the kinds of areas that can be explored. If payment is only made against very specific (technology-focused) outcomes, then there is a fair chance that some, if not all, of the qualitative and governance issues will be missed or under-emphasized. But it is difficult to come up with effective “soft” indicators that can be linked to payments, as these tend to be more subjective, with less certain targets, that are more easily affected by the facilitation/enumeration of the survey/measuring process, and more variable by context. So far, in the WASH Results Programme, this has generally limited beneficiary feedback within verification to confirming that something happened when the supplier reported it (e.g. that a toilet was built in September 2014), not whether the beneficiary liked the toilet or even wanted it.

Opportunities to include beneficiary feedback in data collection

There is scope for using approaches such as satisfaction surveys or including questions about beneficiary satisfaction in household surveys, where results are triangulated with other methods. In addition, a lot of work is currently being undertaken on scorecard and feedback approaches in a wide range of sectors, including the WASH sector. The use of any of these approaches in a PBR context would require both donor and supplier to be very clear on what is being paid for (e.g. infrastructure development, service provision or behaviour change) and what the triggers are for payment or non-payment.

Including more qualitative approaches in verification, such as focus group discussions or individuals’ stories is also achievable. The challenge is ensuring they are representative of the programme as a whole, requiring them to be randomly sampled.  This, of course, requires more resources.

Managing the resource implications of beneficiary feedback

The question of resourcing is key – it is possible to verify almost anything with unlimited resources, but in the real world, different priorities need to be weighed up against each other. In practice, the demands of verification for large scale, representative, quantitative information on which to base payment decisions may leave less time, money and inclination to undertake more qualitative work with beneficiaries.

A resource effective approach to upholding downwards accountability through verification would be to include payment for the existence and effective functioning of a beneficiary feedback system (rather than the results of that system). Payment would be made on verification of the effectiveness of the system in promoting downwards accountability.

This would only work in a systems-based approach to verification such as that used in the WASH Results Programme where verification is based on data generated by suppliers with the MV team assessing the strength of the systems that generate that data through ‘systems appraisals’.  In this scenario, assessment of any beneficiary feedback system would be an extension of the systems appraisal currently undertaken by the MV team; payments could be linked to the results of that appraisal, which is not currently the case.

Finally, it is worth highlighting that the results based reporting requirements, on which the PBR system relies, generate reports that are different from the more qualitative and narrative reports associated with other forms of aid modalities, such as grants.  If donors require human interest stories to communicate a programme’s results to the public, they will need to include this requirement within suppliers’ contracts and Terms of Reference.

In conclusion, our experience suggest that the PBR approach does not inherently promote upward accountability at the expense of downward accountability; it depends on how the contract is designed. We believe that including a requirement for beneficiary feedback as part of verification of results could help to promote downward accountability. We encourage donors to consider this when designing and negotiating PBR programmes.


* This blog post is based on a summary by Catherine Fisher of an online discussion held in June 2016 among members of the Monitoring and Verification team for the WASH Results Programme (Andy Robinson, Joe Gomme, Rachel Norman, Alison Barrett, Amy Weaving, Jennifer Williams and Don Brown).

 

Alignment, aid effectiveness and Payment by Results

To what extent does the Payment by Results approach of the WASH Results Programme follow the aid effectiveness principle of alignment?
One argument for Payment by Results (PBR) is that it can promote “alignment”, which is also an important principle in aid effectiveness. So that’s good, right? But, a closer look at how this slippery term is used reveals differences in understanding that are particularly relevant to the use of PBR in International Development.

According to some PBR commentators, PBR can bring advantages in situations where there is misalignment between the objectives of donors and implementers, but there is some debate about this argument, (see, for example, CGD’s commentary on principle 5 of Clist & Dercon’s 12 principles of PBR).  Either way, the alignment in question here is between the objectives of donor and implementer (or Suppliers as we call them in WASH Results; in our case either individual – SNV, or consortia of, non-governmental organisations – SAWRP and SWIFT).

Compare this with the understanding in the Paris Declaration in which alignment is one of the five principles of Aid Effectiveness. The first principle of Ownership states: “Developing countries set their own strategies for poverty reduction, improve their institutions and tackle corruption.”. The second principle, Alignment, builds on this: “Donor countries align behind these objectives and use local systems.”. In this case, the alignment is that of donors behind national strategies and objectives.

The PBR funding mechanism for the WASH Results Programme is the type that DFID calls Results Based Finance. Under this approach, the contract is between a donor and a service provider, not recipient governments (DFID calls the latter Results Based Aid*). In this context, the term “alignment” as used in the PBR literature may be at odds with the concept of alignment in the Paris Declaration for Aid Effectiveness as it encourages alignment between service provider and donor rather than donor with national stakeholders and priorities. This has led some people to claim that PBR promotes upwards accountability to donors at the expense of accountability to national and local stakeholders.

Experience of alignment with national government stakeholders under the WASH Results Programme

At a WASH Results learning workshop held earlier this year, participants shared their views on alignment in the context of the WASH Results Programme. Over the last year of implementation, some concerns were raised that the PBR modality was a barrier to alignment with national priorities and stakeholders in the countries in which the WASH Results is being implemented. During the learning workshop a nuanced picture emerged of the programme’s experience to date as this extract from the workshop report demonstrates:


Alignment is happening, whether incentivised by PBR or not:  All of the Suppliers work with local stakeholders as a matter of course. However differences in programme design affected to what extent this was incentivised or recognised in payment packages. All of the Suppliers had experienced positive reactions from local stakeholders to the principle of PBR – with one Supplier being asked by local government officials for support in rolling out PBR in one of their programmes. 

Value of building alignment into results packages: There was some sense that the focus on outputs in the first phase of WASH Results had taken attention away from areas such as alignment that are not so easily linked to milestones and so opportunities for alignment had been missed. However, SNV took a different approach to other suppliers by building concrete items into their results packages to reflect their work with local partners, e.g. district plans in each of 60 districts in which they work. While this was felt to be a “smart” approach – SNV warned that there are also disadvantages: “We think we have found some meaningful ways to address elements of alignment, but let’s not be too optimistic about these instruments; they focus attention on direct deliverables” (Jan Ubels, SNV).

Flexibility supports alignment: Suppliers value being allowed to change their approach without going through a contract amendment process. In one case a Supplier was able to change definitions of results to better align with national government definitions.  However, there are potential risks in this approach: “Alignment to what? If the government has a much lower CLTS standard than the SDGs – is that still the alignment we are trying to encourage?” (Louise Medland, SAWRP) 

 Challenge of timelines:  WASH Results has tight deadlines and an emphasis on deliverables while partners, e.g. water authorities, are working to a different longer timeline and may not deliver at the pace required. There is a limit to how much risk can be transferred to partners in this context.

PBR risks limiting Suppliers to existing relationships: participants agreed that PBR can only be introduced where there is existing relationships and social capital and it would be risky to try to implement PBR in places where there was no established relationship.

Additional demands of monitoring for PBR: One Supplier felt that the kind of monitoring carried out for WASH Results could never be the same as that carried out at a local level; it would always be additional to, rather than aligned with, that of the government, although it might stimulate M&E at a local level.

Ways in which alignment could be promoted in future Results Based Finance forms of PBR

To support alignment within a PBR mechanism, participants in the workshop suggested:

  • Valuing alignment at tendering and contracting stage:   Alignment should be considered when costing at the tendering and contracting stage so that prospective Suppliers are competing on an equal basis, given the additional cost (and value) alignment brings.
  • Defining specific hard deliverables, perhaps during a pre-inception phase, that were somewhere between output and outcome phase e.g. district plans.
  • Including specific rewards or incentives in the programme aimed at government to encourage their buy-in to the programme
See especially pages 9 – 10 of DFID WASH Results Programme: Learning Event. e-Pact Consortium, Hove, UK (2016)

Conclusions and looking forward

For PBR to be accepted as an effective form of aid financing it will need to follow all the principles of aid effectiveness, including alignment. The experience of WASH Results so far suggests that this is possible but requires careful consideration of how alignment can be promoted during the design of programmes, contracting and tendering processes,  definition of results and design of verification systems.

Another, more macro, way of supporting alignment using PBR, is for the Independent Verifiers to work much more closely with the national government monitoring systems to verify results. In this model, significant support is given by the donor to improve the national systems and then recipient countries themselves can do the verification. In this case, the use of PBR to fund service delivery would act as a catalyst for strengthening monitoring systems at a national level (although the PBR programmes would need to be of significant scale to be an effective catalyst). This sector-strengthening approach requires long-term investment and a multi-pronged approach, within which PBR projects may only be one element, albeit a potentially catalytic one.

We have not seen much focus on this area so far in the debates around PBR (please alert us to it if we are wrong!). We hope that the experience of our programme will help contribute to that understanding. We will continue to share ongoing lessons learned from implementation as well as findings from the evaluation.

Catherine Fisher, Learning Advisor, WASH Results MVE Team

* For an example of a Payment By Results programme in WASH that uses Results Based Aid (where payment goes from the donor to a recipient government), we suggest readers take a look at DFID’s Support to Rural Water Supply, Sanitation & Hygiene in Tanzania.

The report from the WASH Results learning workshop is available to download from DFID’s Research for Development website. 

As always, if you have any ideas or observations about this topic, we encourage you to Leave A Reply (below), or email us.

The paybacks and pains of Payment by Results (Part 2)

Our series of reflections on WASH Results’ learning continues by exploring value and costs in a Payment by Results (PBR) programme.

DFID has been clear from the outset about what it wants from the Water, Sanitation and Hygiene (WASH) Results Programme: WASH interventions delivered at scale within a short time-frame and confidence in the results being reported to the UK taxpayer. DFID got what it wanted, but at what cost? In this post we build on discussions at the WASH Results Programme’s learning event held earlier this year which looked beyond the numbers of people reached with interventions to explore some of the challenges faced in implementing the programme.

Can PBR frameworks be designed to incentivise suppliers to focus on the “harder to reach”

A central theme in the workshop was the ongoing puzzle of how to place value (both in commercial/financial and Value for Money terms) on intangible aspirations and benefits, such as reaching the most vulnerable and investing in the processes and social capital that underpin effective programming. So, does the importance placed by a donor on achieving clearly costed, verified results risk squeezing out other values and principles that are central to development programming? Which values might end up being pushed aside and could this be mitigated through better design?

1. High quality programming

Suppliers hit a major challenge during tendering when DFID asked them to provide a price per beneficiary that reflected the cost to the suppliers of reaching that beneficiary. But calculating this cost is complex. Potential suppliers have to think about what kind of costs they should fold into that price per beneficiary when bidding: the more the costs, the higher the bid. During the workshop one Supplier asked rhetorically “Should we say $20 with alignment and $23 without?”

There is some apprehensiveness within the NGO sector about competing with the private sector in this commercial context and they are often advised to be cautious. Will they be undercut by commercial organisations submitting more attractive (read cheaper) bids that lack the added benefits that NGOs can bring: the social capital and ways of working that are difficult to put a commercial value on but will affect the quality of the programming?

DFID has been clear that it does not equate Value for Money (VfM) with “cheap” and it is willing to pay for quality programming, whoever is best placed to deliver it. One improvement to the tendering process would be to articulate some of these added benefits (such as existing relationships and social capital in a programme area) as requirements for bidders. Potential suppliers would thus need to provide evidence within the bidding process.

2. Reaching the hardest to reach 

A criticism levelled at PBR is that by using a fixed “price per beneficiary” approach, it encourages suppliers to focus on people who are easier to reach, a practice sometimes described as “creaming” or “cherry picking”. Stakeholders in the WASH Results Programme are firmly committed to inclusion and during the workshop investigated how that could be incentivised better within a PBR framework. Options explored included multi-tiered price per beneficiary frameworks (as used in drug and alcohol recovery programmes in the UK) although these carry the risk of increasing complexity and reducing flexibility. Another suggestion for incentivising inclusion was careful selection and wording of the objectives and appropriate verification processes in the tender document, however this may risk compromising the flexibility to negotiate targets and verification approaches in response to different contexts.

3. Investing for the future

One related but different challenge that emerged during the workshop was that of placing commercial value on activities that invest for future work in the sector. This includes building the social capital to work with local stakeholders and investing in programmatic innovation (which some suppliers suggested had not been possible under the WASH Results Programme). Do the practical implications of PBR risk capitalising on previous investment made by suppliers, without contributing to it in turn? This is perhaps not an issue while PBR contracts constitute a small proportion of aid financing but would become more so if PBR contracts started to dominate. On the other hand, the benefits that suppliers report, particularly in terms of strengthening monitoring and reporting systems to enable more rigorous real-time results tracking may also spill over into other programmes, benefitting them in turn. It is too early to draw conclusions but it may be the case that a range of different aid mechanisms are required, with the benefits and limitations of each clearly identified.

4. Confidence in results

Finally, it is worth observing the possible trade-off between the value placed by DFID on confidence in results that is so important for communicating with taxpayers, and the effectiveness of aid spending that can be achieved through PBR and the nature of the results it produces. Verification is undoubtedly costly (someone paid you to come here just to look at that toilet?” a baffled resident of a beneficiary village is reported to have asked of a verification team member).

But there is another aspect of effectiveness: if PBR prompts suppliers to focus their efforts on what can be counted (i.e. what can be verified at scale without incurring prohibitive expense), this may shift their efforts away from development programming with longer-term and more uncertain outcomes. Put simply, this could equate to building toilets rather than working on sanitation behaviour change interventions, that are considered to generate more sustainable positive outcomes. Of course there is no guarantee other forms of aid financing will generate these results and as there is likely to be less focus on measuring those results, comparison would be difficult.

Advice for PBR commissioners

What might this mean for those considering PBR modalities and designing PBR programmes? The experience of WASH Results so far suggests that when designing a PBR programme, commissioners need to:

  • be clear on the value implied in “value for money” – consider all of the “values” that are important, including the value of donor confidence in results;
  • strike a balance between clearly specifying expected results (particularly for more vulnerable people) and being flexible to the contexts in which suppliers are operating;
  • think creatively and collaboratively about how long-term outcomes can be measured;
  • explore hybrid funding models but avoid creating the “worst of all worlds” that lacks the flexibility of PBR, increases complexity and imposes multiple reporting frameworks;
  • consider whether PBR is the right funding mechanism for the kinds of results you wish to achieve (tools are emerging that can help) ;
  • view the PBR component in the context of the broad spectrum of funding to the sector – seek to maximise linkages and mutual value across the sector.

Catherine Fisher, Learning Advisor, WASH Results MVE Team

The report from the WASH Results learning workshop is available to download from DFID’s Research for Development website. 

As always, if you have any ideas or observations about this topic, we encourage you to Leave A Reply (below), or email us.

The paybacks and pains of Payment by Results (part 1)

Our series of reflections on the WASH Results Programme’s learning starts by identifying where Payment by Results has added value.

Payment by Results (PBR) has been “a highly effective means of incentivising delivery at scale” according to the people that deliver the WASH Results Programme. This finding taken from the report of a recent WASH Results learning event may surprise some PBR naysayers. However, as this first post in a series of reflections on the report shows, when the donors, suppliers and verifiers of WASH Results came together to reflect on their experience of actually delivering and verifying the programme, they were able to agree on several positives alongside their concerns.

blog 1

Participants of the WASH Results 2016 Learning Workshop exploring areas of agreement.

The pros and cons of PBR in development are hotly debated online, but the Center for Global Development reminds us that when discussing PBR, we should be clear about who is being paid, for what and how. The particular way in which WASH Results was designed has therefore influenced the experiences of its suppliers (SNV, and the SAWRP and SWIFT consortia). An important feature of the design (extrinsic to the PBR modality) is that delivery was tied to the water and sanitation target (Target 7.C.) of the Millennium Development Goals. The programme began with an extremely time-pressured initial ‘output phase’ to December 2015 (focussing on installation of WASH infrastructure), followed by an ‘outcomes phase’ that started this year. Another key design feature is that WASH Results is 100% PBR. The nature of the results, however, were agreed on a case-by-case basis with each supplier and include outputs, outcomes and in some cases, process-type activities.

Sharpening focus on results
It is certainly the case that the WASH Results Programme has delivered huge results within a very tight time-frame. Earlier this year, for example, SWIFT reported having reached close to 850,000 people with two or more of water, sanitation or hygiene services. During the workshop participants broadly agreed with the statement that PBR was an important factor in incentivising delivery. Some questioned the extent of the contribution of the PBR mechanism, highlighting instead their core commitment to delivery. However, others were clear that the PBR mechanism has sharpened the focus on achieving results:

Grants have never made it so clear that you ought to deliver. Country directors have to deliver in ways that they have not necessarily had to deliver before and this transpires through to partners, local governments and sub-contractors…Quite a number of these actors have started to applaud us for it.” (Jan Ubels, SNV).

Different consortia passed on the risk of PBR to partners in different ways and the SNV experience reflects their particular approach. But it is evident that the clarity of expectations and pressure to deliver across consortia has been effective in generating results. So, apart from the focus on delivery, what else did people value about the way that PBR has been implemented in the WASH Results Programme?

Flexibility in PBR design
In particular, participants valued the flexibility shown by DFID in setting targets and results milestones to reflect different programme approaches – including agreeing payments for process achievements in some cases. Flexibility in definitions also allowed alignment with local government definitions. The drawback of this flexibility was lack of clarity about expectations and lack of standardisation across different suppliers.

Flexibility in implementation
Suppliers have been able to reallocate resources in response to changing contexts and priorities, without negotiating with the donor. It has also been possible to spread risk across multiple sites of operation; overachieving in one location to offset lower results in another.

Clarity of reporting
The focus on results has driven investment and improvements in Monitoring and Evaluation which is broadly thought to have value beyond the programme. Although reporting requirements that are focused exclusively on results are demanding, people welcomed not having to do the activity reporting that is a feature of many other forms of aid.

Some positives were identified during the discussions at the WASH Results workshop and there is much to celebrate. However, a central theme in the workshop was the ongoing challenge of how to place value (in commercial/financial and value for money terms) on intangible aspirations and benefits, such as reaching the most vulnerable and investing in the processes and social capital that underpin effective programming. These challenges will be explored in the next post.

Catherine Fisher, Learning Advisor, WASH Results MVE Team

The report from the workshop is available to download from DFID’s Research for Development website. 

As always, if you have any ideas or observations about this topic, we encourage you to Leave A Reply (below), or email us.

What have we learned about Payment by Results (PBR) programmes from verifying one?

After 19 verification rounds, the WASH Results Monitoring and Verification team shares its suggestions for how to design future PBR programmes.

Martha Keega assesses a latrine in South Sudan

Verification in action: MV team member Martha Keega assesses a latrine in South Sudan

Verification is at the heart of the WASH Results Programme. Suppliers only get paid if we, the Monitoring and Verification (MV) team, can independently verify the results they are reporting. Usually we can: results are reported by Suppliers, verified by us and Suppliers are paid by DFID to an agreed schedule. However, all Suppliers have received deductions at least once, which, although painful for everyone, is testament to the rigour of the verification process. Overall, the system is working and the results of the programme are clear. But the demands of verification are also undeniable, leading to some aspects of verification being labelled “Payment by Paperwork” and like any process, it could be improved.

In January 2016 the team* came together to reflect on what we have learned so far from conducting 19 rounds of verification across the three Suppliers. Our discussions focused on verification but inevitably considered wider issues around design of a PBR programme. Here we share some suggestions for design of future PBR programmes, from a verification perspective.

  1. Ensure targets and milestones reflect high level programme objectives
  2. Be clear on targets and assumptions about their measurement
  3. Think carefully about enabling alignment with local government and other WASH stakeholders
  4. Reconsider the 100% PBR mechanism to avoid verification inefficiencies
  5. Consider payments for over-achievement of outcomes, but not of outputs
  6. Include provision for a joint Supplier and Verifier inception phase that will streamline verification
  7. Consider pros and cons of relying more on Supplier-generated evidence as opposed to independent evidence generation

1. Ensure targets and milestones reflect high level programme objectives
The WASH Results Programme has ambitions with regard to equity, gender and disability and overall health benefits that are not universally built into targets and payment milestones agreed between DFID and Suppliers. As a consequence, these ambitions are not explicitly incentivised. Any future programme should think carefully about how the design of the programme, especially the targets set in the tender and agreed with Suppliers, uphold objectives based on good practice within the sector.

2. Be clear on targets and assumptions about their measurement
We have found that when payment decisions are riding on whether targets have been met, the devil is in the detail. During implementation, some discrepancies have emerged over targets and how to achieve them. Discussions have taken place about minimum standards for latrines (DFID or JMP definition) and hygiene targets (what does ‘reach’ mean?). In addition, there was occasionally lack of clarity on how achievement of targets would be measured.

When working at scale, assumptions made about the average size of a household in a particular area, or the best way of measuring the number of pupils in a school become subject to intense scrutiny.  This is quite a departure from how programmes with different funding mechanisms have worked in the past and the level of detailed evidence required may come as a shock for Suppliers and Donors alike. In response, we suggest that future programmes should provide clear guidance on technical specifications relating to targets and guidelines for evidencing achievements.

3. Think carefully about enabling alignment with local government and other WASH Stakeholders
One concern that we discussed in the meeting was that the design of the WASH Results Programme does not sufficiently incentivise alignment with local government. We suspect that this was a result of the scale of the programme and the tight timelines, but also the demands of verification. The need to generate verifiable results can dis-incentivise both the pursuit of “soft” outcomes such as collaboration, and, working with government monitoring systems.

We suggest that PBR programmes need to think carefully about how to incentivise devolution of support services from progamme teams to local governments, and to other sector stakeholders during the life of the programme, for example by linking payments to these activities. Also, to think how programme design could encourage long-term strengthening of government monitoring systems.

4. Reconsider the 100% PBR mechanism to avoid verification inefficiencies
The merits or otherwise of the 100% PBR mechanism in the WASH Results Programme are subject to much discussion; we considered them from a verification perspective. We believe that, in response to the 100% PBR mechanism, some Suppliers included input- and process-related milestone targets to meet their internal cash flow requirements. In some cases, this led to verification processes that required high levels of effort (i.e. paperwork) with relatively few benefits.

We suggest that people designing future PBR programmes consider non-PBR upfront payments to Suppliers to avoid the need to set early input and process milestones, and run a substantial inception phase that includes paid-for outputs for Suppliers and Verifiers. In the implementation phase of the WASH Results Programme, payment milestones have been mainly quarterly, so requiring seemingly endless rounds of verification that put pressure on all involved, particularly Supplier programme staff. In response, we suggest that payments over the course of a programme should be less frequent (and so possibly larger), so requiring fewer verification rounds and allowing greater space between them. This may have implications for the design of the PBR mechanism.

5. Consider payments for over-achievement of outcomes, but not of outputs
The WASH Results Programme does not include payment for over-achievement. Over the course of the programme, some Suppliers have argued that over-achievement should be rewarded, just as under-achievement is penalised. As Verifiers, we agree that paying for over-achievement for outcomes would be a positive change in a future PBR design. However, there were concerns among our team that encouraging over-achievement of outputs could have unintended consequences such as inefficient investments or short-term efforts to achieve outputs without sufficient attention to sustainability and the quality of service delivery.

6. Include provision for a joint Supplier and Verifier inception phase that will streamline verification
It is broadly accepted that the WASH Results Programme would have benefited from a more substantial inception phase with the Verification Team in place at the start. Our recommendations about how an inception phase could help streamline and strengthen verification are as follows:

  • Key inception outputs should include a monitoring and results reporting framework agreed between the Supplier and the Verification Agent. Suppliers and Verifiers could be paid against these outputs to overcome cash flow issues.
  • The inception phase should include Verification Team visits to country programmes to establish an effective dialogue between the Verifiers and Suppliers early on.
  • If Suppliers evidence their achievements (as opposed to independent collection of evidence by the Verification Agent – see below), assessment of, and agreement on, what are adequate results reporting systems and processes need to be included in the inception phase.
  • Run a ‘dry’ verification round at the beginning of the verification phase where payments are guaranteed to Suppliers irrespective of target achievement so that early verification issues can be sorted out without escalating stress levels.

7. Consider pros and cons of relying more on Supplier-generated evidence as opposed to independent evidence generation
In the WASH Results Programme, Suppliers provide evidence against target achievements, which is subsequently verified by the Verification Team (we will be producing a paper soon that outlines how this process works in more detail). Is this reliance on Supplier-generated evidence the best way forward? What are the pros and cons of this approach as compared with independent (verification-led) evidence generation?

Indications are that the PBR mechanism has improved Suppliers’ internal monitoring systems, and has shifted the internal programming focus from the finance to the monitoring and evaluation department. However, relying on Suppliers’ internal reporting systems has required some Suppliers to introduce substantial changes to existing reporting systems and the MV team has faced challenges in ensuring standards of evidence, particularly in relation to surveys.

We have some ideas about pros and cons of Supplier-generated evidence as opposed to evidence generated independently, but feel this can only be fully assessed in conversation with the Suppliers. We plan to have this conversation at a WASH Results Programme Supplier learning event in March. So, this is not so much a suggestion as a request to watch this space!

Coming up…

WASH Results Programme Learning Event:  On March 7 2016 Suppliers, the e-Pact Monitoring & Verification and Evaluation teams, and DFID will convene to compare and reflect on learning so far. Key discussions at the event will be shared through this blog.

Verification framework paper: an overview of how the verification process works in the WASH Results Programme. This will present a behind-the-scenes look at verification in practice and provide background for future lessons and reflections that we intend to share through our blog and other outputs.

 

 


* About the MV Team: In the WASH Results Programme, the monitoring, verification and evaluation functions are combined into one contract with e-Pact. In practice, the ongoing monitoring and verification of Suppliers’ results is conducted by one team (the MV team) and the evaluation of the programme by another.  The lessons here are based on the experience of the MV team although members of the Evaluation team were also present at the workshop. Read more about the WASH Results Programme.

Suggestions to donors commissioning Payment by Results programmes

Reflections by DFID WASH Results’ suppliers on the programme’s design and commissioning, summarised into six suggestions for commissioners.

Payment by Results (PbR) is a technically challenging form of contracting and one that is new for DFID and many of its partners (NAO 2015, p8, DFID, 2015 p18).   The WASH Results Programme was designed using the PbR financing mechanism, and therefore has great potential for learning about the impact of PbR on programming.

One year into the programme, the WASH Results suppliers met to share experiences so far, particularly how the programme was designed and commissioned and the effects PbR had. This discussion has been distilled into a set of suggestions for people commissioning PbR programmes in development.

Six suggestions for commissioners of Payment By Results programmes

The discussions reflected the participants’ experiences as people leading supplier consortia, rather than those directly implementing the programme or its beneficiaries and although DFID staff were present their role was largely that of observer. Discussions built on the early findings shared by the Oxford Policy Management team leading the formal evaluation of the programme for the e-Pact consortium. The suggestions that emerged are inevitably not as rigorous as the final findings that will come from this formal evaluation nor from others’ extensive reviews drawing on multiple programmes and experience. However, our suggestions add support to some of the National Audit Office (NAO) recommendations on PbR that were published a month after our workshop, in particular the “Payment by Results: analytical framework for decision-makers” (NAO, 2015).

1. Consider what type of PbR is the right mechanism for achieving the desired outcomes.

There are multiple ways in which PbR programmes can be designed and the selection made will influence who applies, how suppliers devise and manage their programmes and the subsequent results. An important difference between PbR programmes is the proportion of payment that is “pure PbR”. WASH Results is designed as a 100% PbR programme and this prompted some suppliers to take steps to minimise the risk of not achieving targets. Some set disbursement milestones early in the impact pathway to aid cashflow, rather than set exclusively outcome-based milestones. Some rethought the areas they were working in, shifting away from work in the most challenging areas, and there is some indication that suppliers relied on tried and trusted methods rather than trying new approaches.

The workshop participants suggested that pre-financing may be necessary to achieve genuine emphasis on outcomes, particularly in risky contexts or if innovation is important so that risks are not born solely by suppliers. Echoing other discussions on PbR (BOND p13) , participants discussed how the PbR mechanism may not be appropriate for programmes that are intended to target the most vulnerable and/or operate in fragile contexts, however, the success of the WASH Results Programme in the Democratic Republic of Congo demonstrates that it should not be ruled out. These issues need careful consideration when selecting the design of a PbR programme and the NAO report provides an analytical framework for doing so.

2. Create spaces for learning about PbR within the commissioning process.

As the PbR modality is new to many organisations (suppliers and commissioners) it is important for commissioners and suppliers to explore options and learn from experience in order to design the most effective model. Ideally this will happen in an interactive way that will help to build relationships between stakeholders. Workshop participants stressed the importance of learning from the private sector about approaches to PbR, for example in areas such as how to assess and price risk. They also advocated a longer inception phase in programmes using multiple suppliers, to enable suppliers to talk to each other about the approaches they are considering adopting.

The NAO’s analytical framework for decision-makers advocates a learning approach to commissioning PbR programmes and it encourages commissioners to engage in dialogue with potential providers from the outset. However it does not explicitly recommend creating spaces for learning and relationship-building between stakeholders within the commissioning process; we think this would be a useful addition to the framework.

3. The tender documents need to be clear about what is meant by PbR, from the outset.

This includes providing the rationale for using PbR and sufficient detail about matters such as disbursement, results, and the processes and conditions around force majeure, particularly but not exclusively in fragile contexts. There should be clear guidance on how to define minimum standards: in sanitation, for example, does the minimum criteria for improved latrines allow for shared use?  The NAO framework helps commissioners to think through high-level issues, however the detail of sector specific standards may need to be determined in pre-tendering discussions with potential suppliers and/or monitoring and verification providers.

4. Set up Monitoring, Verification and Evaluation (MVE) frameworks before implementation starts.

The MVE team for a PbR programme needs to be appointed before the suppliers and the MVE framework needs to be created before implementation starts. This would enable standardisation of approaches across suppliers and enable suppliers to create their monitoring and evaluation frameworks according to the requirements of verification processes. This is perhaps the clearest suggestion to emerge from the workshop and once again accords with the NAO framework which asks “Is there an agreed system for measuring provider performance? Will this system be in place at the start of the scheme?” The WRP suppliers’ experience suggests that it should be!

5. Consider what impact the contracting process will have on opportunities for collaboration and learning.

The workshop participants felt that the tendering process for the WASH Results Programme made international non-governmental organisations into competitors rather than collaborators and this can lead to lack of transparency and learning between organisations. Given the broader move within aid commissioning from grants towards more competitively tendered contracts, this is an example of where it is difficult to attribute effects purely to the PbR mechanism.

As an alternative to a competitive tender, the WASH Results suppliers suggested commissioners pursue a “negotiated” procurement procedure during which the commissioner enters into contract negotiations with one or more suppliers.

6. Allow extra time to commission PbR programmes than for more familiar contracting processes.

The complexity of PbR contracts and their relative unfamiliarity in the development sector imply the need to allow more time for commissioning than usual. How to use that extra time? The previous suggestions from our workshop indicate that this lengthier commissioning process should comprise the following phases:

  • Pre-bidding phase: in which the donor’s understanding of PbR is clearly laid out, and in which potential suppliers are able to access insights into the different models of PbR financing and the requirements and risks of implementing a PbR programme.
  • Bidding/contracting phase: recognising that this is a resource-intensive process for suppliers; possibly conducted as a negotiated process rather than a competitive tender.
  • Inception phase: with space for suppliers to share approaches and refine their programme design, in which a standardised MVE framework is shared and refined and means of verification agreed; milestones and payment schedules are agreed; programme expectations are agreed with partners; and consortia develop common understanding, language and approaches.
  • Implementation phase: implementation with appropriate verification cycles and disbursement points, ongoing learning and review.
  • Closing phase: for end-of-term evaluation, especially to draw out lessons learnt and find ways of furthering work beyond the project period of implementation.

Have you tendered for, or commissioned a PbR programme?

Do our suggestions and observations reflect your experience?

What suggestions would you add to our list?