Monitoring of a program or intervention involves the collection of routine data that measure progress toward achieving program objectives, and tracking changes in program performance over time. Operationally, the purpose of M&E is to support learning through constant feedback loops of analysis, response, and evaluation at multiple levels, and drawing on multiple sources of information to enable stakeholders make informed decisions regarding the effectiveness of programs and the efficient use of resources.

On the other hand, an evaluation measures how well the program activities have met expected objectives and / or the extent to which changes in outcomes can be attributed to the program or intervention. The difference in the outcome of interest between having or not having the program or intervention is known as its “impact,” and measuring this difference is commonly referred to as “impact evaluation.”

Performance indicators provide objective evidence that an intended change is occurring. Performance indicators lie at the heart of developing an effective performance management system – they define the data to be collected and enable actual results achieved to be compared with planned results over time. Hence, they are an indispensable management tool for making evidence-based decisions about program strategies and activities. Performance indicators can also be used:

1. To assist managers in focusing on the achievement of development results.
2. To provide objective evidence that results are being achieved.
3. To orient and motivate staff and partners toward achieving results.
4. To communicate achievements to funders and stakeholders.
5. To more effectively report to stakeholders, results achieved

Indicators may measure outputs or outcomes. Indicators that measure outputs are used to assess whether and to what extent outputs have been delivered, while indicators that measure outcomes are used to assess whether, or the degree to which the expected outcomes have occurred.