Very little is known about the actual impact of projects on the poor. Many are reluctant to carry out impact evaluations because they are deemed expensive, time consuming, and technically complex, and because the findings can be politically sensitive. Yet a rigorous evaluation can be powerful in assessing the appropriateness and effectiveness of programs. Evaluating impact is particularly critical in developing countries where resources are scarce and every dollar spent should aim to maximize its impact on poverty reduction. This handbook seeks to provide project managers and policy analysts with the tools needed for evaluating project impact. It is aimed at readers with a general knowledge of statistics. Chapter 1 presents an overview of concepts and methods, Chapter 2 discusses key steps and related issues to consider in implementation, Chapter 3 illustrates various analytical techniques through a case study, and Chapter 4 includes a discussion of lessons that have been reviewed for this handbook. The case studies, included in Annex I, were selected from a range of evaluations carried out by the Bank, other donor agencies, research institutions, and private consulting firms. Also included in the annexes are samples of the main components that would be necessary in planning any impact evaluation - sample terms of reference, a budget, impact indicators, a log frame, and a matrix of analysis.