Project identification

The five major stages of the project cycle are identification, preparation, appraisal, implementation and
evaluation. The first two stages are largely the responsibility of government, which may intend to
finance a project from its own resources or to seek external assistance, though donor agencies may play
an influential role. Viewed as a technical process identification involves, in the following sequence
• Preliminary stakeholder analysis
• Problem analysis
• Setting of objectives
• Analysis of alternatives
• Accountability analysis
• Logical framework thinking
• Analysis of assumptions and associated risks
• Progress indicator definition
• Stakeholder review

Project identification
In practice, project ideas often result from the identification of
– a discrete set of activities identified as important within programme-based activities, a country’s
poverty reduction strategy and/or sector-wide approach
– problems or constraints in the development process caused by shortages of essential facilities,
services, and material or human resources and by institutional or other obstacles
– unused or underused material or human resources and opportunities for their conversion to more
productive purposes; or, conversely, overused natural resources that need to be conserved or restored
– unsatisfied demands or needs and possible means to meet them including opportunities arising from
new technology or technological development, for example, the internet and mobile telephony
– the need to complement other investments (such as providing railway and port links for a mining
project, transport, packing and marketing facilities for an agricultural development project, or access
roads for a sugar factory and bio-ethanol plant) Project ideas may also emanate from
– initiatives by local private or public entrepreneurs who wish to take advantage of opportunities they
perceive or who are responding to government incentives
– community initiatives (often supported by national or international NGOs)
– a government response to local political or social pressures originating, for example, from economic,
social, or regional inequalities
– a need for advocacy aimed at government in a weak policy environment
– the pursuit of national objectives such as food security
– the occurrence of natural events (drought, floods, earthquakes) and the short-term responses to crisis
– as a response to long-term trends such as migration, environmental degradation, and climate change
– a desire to create a permanent local capability to carry out development activities by building up local
institutions

Steps In project Identification

Strategic Alignment
Align Overall and Programme (s)Strategies
Project Identification- Align projects to programmes
Annual Budget for Programmes (not part of toolkit)
Project Identification is the process of selecting a theme to be further developed into a project concept.
It outlines the location where the project will occur, the broad approach the project will take and the
problem (need) to be addressed.
Strategic alignment is the strategy framework within which programmes and projects are initiated,
funded and implemented and needs to be aligned to National, Provincial and Regional Government
priorities. Lessons learnt from similar projects are incorporated here. This stage should result in:
1- Identification of projects which are aligned with the overall Programme strategy,
Development priorities and Government objectives
2- Project selection which is relevant and feasible
This phase gives a strategic orientation which should guide the identification of projects. It also serves
as background and introduction to programme and project managers, assuming that during the strategic
planning and strategy review of the Development Agency had already considered all the elements
which it briefly touched on during this phase.

Project Formulation

Project Formulation consists of identifying the scope, schedule and budget for the proposed project.
Scope is identified typically through a sketch prepared by a member of Project Management. Project
Formulation is defined as taking a first look carefully and critically at a project idea by an entrepreneur
to build up an all round beneficial to project after carefully weighing its various components.

Once the scope has been identified via the sketch, the Director of Project Management evaluates the
plan, estimates its total project cost, and estimates the elapsed time schedule for the project. Project
formulation divides the process of project development into eight distinct and sequential stages. These
stages are
• General information
• Project description
• Market potential
• Capital costs and sources of finance
• Assessment of working capital requirement
• Other financial aspect
• Economic and social variables
Steps in Project Formulation
The process of Project development has been categorized in seven different steps.
 Feasibility analysis
 Techno Economic Analysis
 Project Design and network analysis
 Input analysis.
 Financial analysis
 Social cost benefit analysis
 Pre investment analysis