Tag Archives: contracting

Truly exceptional? Handling misfortune within Payment by Results

An exceptional event or a predictable adversity? The difference matters more in a Payment by Results (PbR) setting, as this blog post explores.

Conflict, political upheaval, epidemic, drought, flooding and earthquake; the WASH Results Programme has been hit by a wide range of disasters across the 12 countries in which it operates. All these adversities had an impact on the populations involved: some hit the programme’s implementation, some the sustainability of its achievements and others have affected the ability to monitor and verify those achievements.

Discussions on how to deal with these events have involved considering what is within the reasonable expectation of a Supplier to anticipate and deal with, and what is a truly exceptional event for which there should be flexibility around what Suppliers are expected to deliver – whether in the quantity, scope or timing of results.

The challenge of responding to exceptional events is not new for development programmers, but like many challenges, it takes a different shape in the context of a PbR programme. In such programmes, payment is linked to achieving and verifying results, and an impact on results ultimately leads to a financial impact for one or more of the parties. This is particularly challenging in the second phase of WASH Results, where Suppliers are paid for sustaining results achieved in the first “Outputs” phase. The passage of time means that programme achievements (whether physical infrastructure or behaviour change) are more likely to be affected by exceptional events, and suppliers may not have the resources (such as programme field staff) in place to undertake substantial mitigating actions.

Members of our team (Monitoring and Verification for the WASH Results Programme) recently met to discuss their experience of exceptional events in the programme and how these were tackled. Here are three of the examples they discussed followed by the team’s reflections on the issues they raise:

1) The moving population In this example a conflict-affected community relocated out of the proposed project area. In response, the Supplier closed the project in that area but thanks to overachievement of results in other locations, the overall outputs of the programme (in terms of beneficiaries reached) were not reduced and the Supplier did not suffer financially. In this case, the flexibility of PbR meant the risk to Supplier, Donor and Verifier could be effectively mitigated, although some of the original intended beneficiaries were not reached.

2) Destroyed infrastructure, different decisions In one instance, WASH infrastructure built in the first (output) phase of the WASH Results Programme was destroyed when a river eroded part of a village.  Although there was a known risk of erosion, the timing of erosion could not be foreseen nor the risk mitigated. The people living in this area were some of the poorest and most vulnerable whom the Supplier did not want to exclude from the programme.  The erosion was considered extreme, as evidenced by newspaper reports and other local data and it was agreed the area with the destroyed infrastructure would not be included in the sample frame for outcome surveys and so would not affect outcome results.

Meanwhile, in the same country, infrastructure was damaged by flooding, but this was considered expected, not extreme. In contexts where flooding can be expected, the demand for sustained outcomes (in which payment is linked to the sustained use of infrastructure) requires that infrastructure is built in such a way that it can withstand expected levels of flooding, or that plans for reconstruction or repair in the case of damage should be integral to programming. Consequently, areas in which infrastructure was affected by flooding were to be included in the sample frame for the outcome survey, which was amended to include questions about flood damage and beneficiary priorities for reconstruction.

3) When verification is too risky  When conflict erupted in one project location, the programme was able to implement activities regardless and continued to achieve results. However, the security situation on the ground made it too risky (for programme staff and the verification team) for the results to be independently verified through a field visit. In this case, alternative and less representative forms of verification were accepted. In this example, there was no adverse impact on the results achieved, or reduction in payment to the Supplier, but there was increased risk around the confidence that could be placed in the results.

Making decisions about risk

In exceptional circumstances, decisions need to be made about who bears the risk (Donor, Supplier, Verifier, Beneficiaries) and what kind of risk (physical, financial, reputational). If financial risk falls exclusively on Suppliers, they need to factor that into their “price per beneficiary” across the programme. Alternatively, Suppliers may choose not to operate in riskier areas, with potential negative consequences for the equity of programme interventions. If donors accept all risk, there is little incentive for Suppliers to programme in ways that account for predictable risks, such as flooding, particularly over the longer term.

Reflections and suggestions emerging from the discussion of these cases included the following:

  • There are different types of impact to consider: effect on population, effect on ability to deliver activities, effect on achievement of results, and effect on ability to verify results. Being clear on the type of impact might aid decisions about who bears the risk and the mitigation strategy.
  • Discussions about risk need to happen during the design phase; one approach is to use a risk matrix that explores what level of risk each party is going to absorb (and so design into the programme) and what would be considered ‘exceptional’.
  • Programmes need to include within their design plans for responding to anticipated events e.g. in areas at risk of flood, include help for villages to cope with normal levels of flooding.
  • Suppliers can minimise their financial and operational risk by balancing their work across a range of fragile and more secure areas, so enabling them to pull out of more hazardous areas in extreme circumstances and achieve results elsewhere. However, if the Supplier commits to working with specific communities in conflict-affected areas, then incentives will need to be set up differently within the results framework.
  • In fragile contexts, a compromise may need to be made on rigour of verification and plans made for reliance on remote verification from the start, e.g. analysis of systems, remote data collection through phone or satellite, and beneficiary monitoring.

Our conclusions about exceptional events in the context of a PbR programme in WASH echo those in many of our previous blog posts. PbR throws a spotlight on an issue, raises questions of how risk is shared between stakeholders, and highlights the importance of planning at design phase and of flexibility, should the unforeseen occur.

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

Reflections on our experience of DFID’s results agenda

As verifiers of a DFID Results Based Finance programme, ODI’s research on the UK’s results agenda prompted us to reflect on our experience.

 

Kakimat latrine eaten by goats

Why context matters when you focus on results #1: Some latrine building projects have to allow for the impact of hungry goats. Photo credit: Chamia Mutuku

 

In their report ‘The Politics of the Results Agenda in DFID: 1997 to 2017’, Craig Valters and Brendan Whitty argue that 2007 saw a new explicit focus from DFID on aggressively implementing results-based management. 10 years later, we have WASH Results: a DFID-funded programme where financial risk has been completely transferred away from UK taxpayers to the international NGOs who deliver the work and who only get paid for results that have been checked by a third party – us. However, as its name promises, the programme is delivering results in water, sanitation and hygiene (WASH). DFID was able to read in the programme’s 2017 annual report (with great confidence in the figures), for example, that WASH Results had reached over 1.1 million people with improved water supply, more than 4.7 million people with improved sanitation, and over 14.9 million people with hygiene promotion.

In our role as Monitoring, Verification and Evaluation Team for the WASH Results programme, our attention is less focused on the politics of the results agenda, and more in how results are monitored and verified and the very real impact that this approach has on ongoing programme delivery. However, we read the report and blog post by Valters and Whitty with great interest.

After more than three years of supporting the programme, how does our experience compare with the conclusions and recommendations of the ODI report? One key finding from the research is that some DFID staff have found ways to adhere to the results agenda, while retaining flexibility. This theme of the ways in which both donors and programme implementors are working creatively around the “tyranny of results” was one that we heard during last year’s BOND Conference session ‘How to crack Results 2.0’.

How can PBR be adapted to address the imbalance in accountability?

We absolutely agree with Valters and Whitty about the importance of finding a balance between being accountable to UK citizens and to the beneficiaries (poor people abroad). This time last year, we shared our opinion that if verification was designed to include beneficiary feedback and this was linked to payment, Payment by Results (PBR) could actually generate more downward accountability than other funding modalities. However, our team of verifiers felt that 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. So, we suggested that a resource-effective solution 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.

We welcome the authors’ call to “Create a results agenda fit for purpose”. Our first reflection would be that a results agenda, at least one hard-wired into a PBR modality, is not going to be appropriate in all contexts and for all intended outcomes, particularly those where outcomes are difficult to predict or challenging to measure. Our set of recommendations to commissioners of PBR programmes, complement several of those made by ODI, for example, their suggestion that DFID spend more time considering whether its aid spending has the right mix of risks and the view that regular testing (that leads to course-correction) is important.

The challenge of communicating about costs and value

The authors also call on ministers to be honest with the British public about aid. Part of this, we feel, is making it clearer that Value for Money (VFM) is not synonymous with “cheap”. We feel that the results agenda, particularly a PBR model, should require donors/commissioners to clearly articulate the “value” they expect to see in VFM. Otherwise the importance placed by a donor on achieving clearly costed, verified results could risk squeezing out other values and principles that are central to development programming. A central theme in last year’s WASH Results learning workshop was the ongoing puzzle of how to place value (both in commercial/financial and VFM terms) on intangible aspirations and benefits, such as reaching the most vulnerable and investing in the processes and social capital that underpin effective programming. This is particularly important in an increasingly commercialised aid context, where one supplier’s approach would be to parachute in and build many toilets very quickly and cheaply, whereas another proposes taking longer to work with local stakeholders, norms and materials. This articulation of value may not be as simple as it sounds, when every commitment in a PBR programme, such as reaching the poorest, gender equity, national ownership, sustainable outcomes, etc. needs to be reflected in meaningful and measurable indicators.

Payment By Results can aid course correction

Interestingly, one of the reforms that the authors call for may be an inherent feature of the results framework itself. They say that “interventions need to be based on the best available information, with regular testing to see if they are on the right track”. We have found that a product of the PBR modality is that much greater emphasis is placed on monitoring systems and the generation of reliable data about what is happening within programmes. In WASH Results we have seen cases where the rigorous (compulsive?) tracking of results has identified areas where programmes are failing to deliver and rapid action has then been taken to address that failure. As verification agents we argue that this is due not only to the link between results and payment but also the independent verification of data and systems that has led to better information on which to base decision-making.

Benefits of the results agenda

In this way we think that the focus on monitoring within the results agenda, can, in some cases, enable flexibility and innovation. In its reliance on high quality data, it contains within it a driver that could improve the way that development work happens. The results agenda brings benefits – some of which we did not see reflected in the article – but it comes with risks; both ideological about the ambitions for UK Aid and practical for those involved in its delivery. And so we welcome this debate.

Catherine Fisher, Learning Advisor, WASH Results MVE Team

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.

Embed from Getty Images

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.

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?