Part II

Section I. Project Initiation Phases

Initiation is the first phase of the project lifecycle.

The Initiating Process Group consists of those
processes performed to define a new project or a new
phase of an existing project by obtaining
authorization to start the project or phase

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The Project Initiation Phase is the conceptualization
of the project.
This section describes the basic processes that must
be performed to get a project started. Accordingly, the
purpose of the Project Initiation Phase is to specify
what the project should accomplish.
This starting point is critical because it is essential for
those who will deliver the product/process, for those
who will use that product/process, and for those who
have a stake in the project to reach agreement on its
initiation.

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Elements of the Initiation Phase

The initiation phase of a project represents the

activities associated with starting up the project.
The following are the major points under initiation
phase:
Project conception
 Project Identification
Project formulation
- Feasibility Studies
- Project appraisal (Project Evaluation)

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1.1. Project Conception
At this stage an idea regarding a required intervention
in a specific area to address an identified problem is
formed or developed.
Generally, the idea about a project can arise from
many sources. It could arise from within an
organisation or from outside an organisation.
This idea is usually hatched through discussion by
local leaders in a community and specialists as need
based issue and crystallized into a proposal.

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The project can therefore conceived on the basis of:
Needs- to make available to all people in an area minimum
amounts of certain basic materials requirements or services
Market demand (domestic or overseas) when supply is
scarce
Resource availability- opportunity to make profitable use
of available resource
Technology- to make use of available technology
Natural calamity- these are against the adverse effects of
natural events as drought or floods
Political consideration

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Project ideas conceived by:
Individuals
Groups of individuals (community)
Local leaders
NGOs
Policy makers
Planners
International development agencies
Government pronouncements

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1.2. Project Identification
 Project identification is the first step in the project life cycle.
Project identification is the process to assess each project idea
and select the project with highest priority.
Potential projects arising from the ideas crystallized in the
first point (conception) above are determined.
The information in the proposal from project conception may
be submitted by an individual or community representative to
an agency capable of identifying an institution to provide the
necessary support to realize the expectation.
The type of information provided at this stage is usually general
and descriptive

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Project identification - continued
Project identification is the basic phase of the project
development cycle.
It begins with the conceiving of ideas or intentions to set
up a project. These ideas are then transformed into a
project.
This phase involves collecting, processing and
analyzing data on problem/needs of the
areas/community/organization.
The data/ information generated during this stage provide
a basis for the next or second stage of the project cycle.

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For projects to be properly conceived, the
characteristics below must be clearly defined:
These characteristics are the project concept documents
 Objectives
 Expected outputs
 Intended beneficiaries
 Planned lifespan
 Extended outcome of the project
 Principal stakeholders
 Financial plan and source of financing
Every organization has its own variations of what
documents are required to initiate a project. It’s
important to identify the project need, stakeholders,
and main goals.
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Project identification consists in finding project ideas
that could contribute towards achieving specified
development objectives.
Desirability, feasibility, affordability and
Relevance are issues employed in project
identification.

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Desirable: A project is desirable if it can bring a change
to the society by solving the problems in development or
if it has adequate market for its product/service
Realistic: A project is realistic if it has specific,
quantifiable, feasible and achievable objectives,
sustainable effects, acceptable risks and reliable
customers.
Affordable: A project is affordable if the cost is
reasonable and if there are enough human, material and
financial resources for its implementation
Relevance: a project is relevant if it is agreeable to the
policy and development strategy of the country and if it
remains consistent with government policies.
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Description of project idea
Once a project has been identified, the next stage is to
describe the idea so that it can be prioritized and move
on to the next stage in the process.
This may involve the preparation of a project
identification report or project concept or profile.
Whenever it is developed it is essential to have a clear
idea of what the proposed project is supposed to be
and what are hopes to achieve.

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It should include answers to the questions given in the following.
a. Justification and Purpose
What goal is the project contributing to?
What is the purpose of the project, what does it intend
to achieve?
What problem is the project addressing?
What is the justification of the project?
What demands, needs or opportunities is the project
addressing?

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b. Beneficiaries and Stakeholders
What will benefit from the project?
Who identified the project?
Who has a share or stake in the project?
Who will be positively or negatively affected by the
project?
Which institutions are the targets of the project?

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c. Resource and Institutions
What potential resources may be available for
implementing the project?
Which organizations are to be involved in project
planning and implementations?

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d. Policies and Plans
How does the project proposal fit into any sector or
regional plans?
Does the project fit into current policies?
e. Impacts
What are the likely major positive and negative social
impacts of the project?
What are the likely positive and negative environmental
impacts of the project?

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f. Support
What is the level of political and administrative support for
the project?
Does the project have the support of beneficiaries and/or
local communities?
g. Risks
What are the chances of the project achieving its objective?
What are the main risks associated with the project?
What assumptions have been made, e.g., what support is
needed from others?

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Prioritization & Ranking
The limited resources available mean that effective
project identification and selection at various levels
will be essential.
There will be more ideas for potential projects than
resources available.
Potential criteria for ranking projects are given below.
Extent
Number of people and geographic area affected by the
project- More people affected means the project will be
given more weight.

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Economic and Financial benefits
Potential financial and economic benefits to the country or region
and individuals.
Environmental impact of the project on
Conservation of natural resources and more sustainable land use,
Protection of natural resources (e.g., forests).
Social
Contribution of the project to Poverty alleviation,
 Assistance to disadvantaged groups.
Policy
Is the project in line with national policies?

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Resources
Availability of human resources to implement project,
Likely availability of funding from government, etc
Success or Failures
What are the chance of the project successfully meeting its
objectives?,
What degrees of the risks are associated with the project that
may affect its implementation?
Support
Political support for project,
Community support and demand for project.

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 Project Rating Index
When a firm evaluates a large number of project ideas
regularly, it may be helpful streamline the process of
preliminary screening.
For this purpose, a preliminary evaluation may be
translated into a project rating index.

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The steps involved in determining the project rating index are as follows:

Identify factors relevant for project rating.

Assign weights to these factors (the weights are
supposed to reflect their relative importance).
Rate the project proposal on various factors, using a
suitable rating scale (Typically a 5 – point scale or a 7 –
point scale is used for this purpose.)
For each factor, multiply the factor rating with the
factor weight to get the factor score.
Add all the factor scores to get the overall project
rating index.
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The following table illustrates the determination
of the project rating index.
Once the project rating index is determined, it is
compared with a pre – determined hurdle value to
judge whether the project is prima facie worthwhile or
not.

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Factor Factor Factor
Weight score
VG G A P VP

5 4 3 2 1

Input availability .25 * .75

Technical know-how .10 * .40

Reasonableness of cost .05 * .20

Adequacy of market .15 * .75

Complementary relationship with other products .05 * .20

Stability .10 * .40

Dependence on firm’s strength .20 * 1.00

Consistency with governmental priorities .10 * .30

4.00
Rating index
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Identification of Private Project Ideas
Students self exercise
Discuss how idea is generated and
identified.

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