Most development organisations have traditionally used the Logical Framework Approach to design, monitor and evaluate development projects. We depart from this mechanical view and join an emerging literature that recognises project complexity as well as the importance of institutional dynamics. The article deals with an evaluation of a multi-sectoral project in Tanzania, centred on the production, selling and distribution of milk in schools. By combining qualitative and quantitative methods and using the capability approach as conceptual framework, we analysed the project’s effect on selected functionings, entitlements and agency of the different stakeholders. We found a positive effect on nutrition knowledge, farmers’ earnings and milk production, and an interesting unintended outcome of the project, an increase in children’s school attendance. However, an in-depth institutional analysis reveals problems in the institutional setting and in the relationships between stakeholders that undermine a sustainable human development process.