This guide from the International Development Research Centre (IDRC) outlines the advantages and disadvantages of selecting either an internal or external evaluator. It also describes the characteristics and qualities of an effective evaluator/evaluation team.
"In certain situations, hiring an external evaluation consultant or evaluation team may be appropriate and/or required. Generally speaking, expertise, impartiality, cost, and time are key considerations for employing an external consultant/team for an evaluation. That is, the scope and complexity of the evaluation may demand the expertise of an external consultant; the politically sensitive nature of a program or project may require the impartiality of an external evaluator; or, where personnel resources and timeframe are more scarce than funding, an external evaluator may be the better choice." (IDRC 2004)