This handbook discusses the basic definitions and principles of M&E, including where, why and how evaluation is carried out, and a detailed examination of what qualities are possessed by both good and bad indicators. There is an in-depth discussion of the functions of community based M&E and a list of 'ten steps' is provided to guide in developing and supporting a community based M&E system. Each steps is examined and illustrated with reference to a project in in India. There is also a list of do's and dontÆs in supporting a community based M&E system and a discussion of links that can exist between the M&E systems of an agency such as an NGO and that of a community based organisation. The paper concludes with a discussion of how M&E fits into the project cycle and the importance of fostering the right attitudes towards M&E practice is emphasised.