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Chapter 3 Project Identification
Chapter 3 Project Identification
Project Identification
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Contents
• Conceptual Clarification
• Sources of project ideas
• Steps in Project Identification and Selection
Situation analysis
Stakeholders analysis
SWOT analysis
Problem analysis
Objective analysis
Group Exercise
Chapter objectives:
At the end this chapter, You will be
able to:
• identify feasible project ideas to
solve a certain problem or exploit
opportunities, and
• apply different tools [problem tree]
in project identification and
selection.
3.1. Project Identification-meaning
- It involves the conceiving of ideas or
intentions to set up a project.
- These ideas are then transformed into a
project.
Project ideas are normally initiated
by a perceived need [PROBLEM or
OPPORTUNITY] in an organization
and converted in to a formal project
proposal.
Project Identification-meaning
The major focus in this step is finding project ideas
or identifying needs or demands for projects.
The activities carried out are generally fact-finding
survey, or review of census or available secondary
data.
3.2. Sources of project ideas:
The community, researchers, experts, local leaders, Policy makers,
entrepreneurs, donors, NGOs, Planners, etc.
Government policy priorities, unusual events, external threats,
unsatisfied demands, under utilized natural resources, etc.
The business or government development planning document
Needs of clients
Individual working in organizations, well informed technical
specialists
Local leaders
Government departments,
Other country's experiences
Various Chambers of Commerce and Industry
National Small Industries Corporation, and several other
institutions including the business press,
They regularly publish valuable data and analytical reports about the
trends of demand, supply, costs in various segments of industry and
business.
Cont …
In general, the sources of project
ideas can be broadly classified into,
1. Macro-level
National policies, strategies, sectoral, sub –
sectoral or regional plans.
General surveys,
◦resource potential surveys,
◦regional studies,
◦master plan and
◦ statistical publications indicate directly
or indirectly investment opportunities.
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Cont …
Constraints on the development process due to
shortage of essential infrastructure facilities.
Unusual events such as,
◦draughts,
◦floods,
◦earth – quakes, hostilities, etc
From multilateral or bilateral
development agencies and as a result
of regional or
international agreements in which the
country participates.
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Sources of … …
2. Micro Level
The identification of unsatisfied
demand or needs.
The need to remove shortages in
◦ essential materials,
◦ services or
◦ facilities that constrain development efforts;
◦ The initiative of private or public enterprises
in response to incentives provided by
the government;
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Cont …
The necessity to complement or
expand investments previously undertaken.
The suggestions of financial institutions and
development agencies.
Study of new Technological Development.
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Approaches to project identification
There are two major approaches to
project identification :
(a) Top-down approach
(b) Bottom-up approach
Top-Down Approach
Projects are identified based on demands from beyond
the community.
This may include directives from:
international conventions (such as Kyoto
Protocol/climate change)
international institutions that have
determined particular priorities and thus
projects
national policy makers identifying projects
that pertain to party manifestos and/or
national plans.
Advantages of Top-Down Approach
It may be a rapid response to disasters like floods,
beliefs of people.
Assumes external individuals know better than the
Stakeholders analysis
SWOT analysis
Problem analysis
Objective analysis
Key Question
Whose problems or opportunities are we
analyzing? Who will benefit or loose-out,
and how, from a potential project
intervention?
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Stakeholder Analysis _ Cont’d
Purpose: To identify:
Needs and interest of stakeholders
Organizations and groups that should be encouraged
to participate in different stages of the project
Potential risks that could put at risk programme
Opportunities in implementing a programme
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C. SWOT Analysis-Cont’d
SWOT analysis is a tool for institutional appraisal and a
brainstorming exercise in which the representatives of
the organization participate fully.
Strengths - the positive internal attributes of the
organisation
Weaknesses - the negative internal attributes of the
organisation.
Opportunities - external factors which could improve
the organisation’s prospects
Threats - external factors which could undermine the
organisation’s prospects
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D. Problem Analysis
Problems Analysis visually represents the causes and
effects of existing problems in the project area, in the form
of a Problem Tree. It clarifies the relationships among the
identified problems.
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Problem Analysis-Cont’d
Relationships of Problems?
EFFECT
I am not motivated to work
CAUSE
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Problem Analysis-Cont’d
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E. Objective Analysis
Objective Analysis clarifies the means-ends
relationship between the desirable situation that
would be attained and the solution for attaining it.
This stage also requires an Objective Tree.
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F. Project Selection/ Analysis of alternatives.
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Project Selection _ cont’d
How to select the project
1. Divide the objective tree into different clusters of
objectives
2. Name all clusters
3. Remove impossible one to achieve
4. Set criteria to make the final selection
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Analysis of alternatives.
At this stage, there is a need to assess the alternative
courses of action proposed by each objective tree in
terms of effectiveness, costs, feasibility, impact on
priority groups, risks or other criteria.
Criteria can be:
Technical
Financial
Economic
Institutional
Social/distributional
Environmental
Preliminary screening
Once some project ideas have been put forward, the next step
will be to select one or more of them as a potentially viable.
This requires a quick preliminary screening by experienced
professionals.
At this stage, the screening criteria are vague and rough
During this stage, the analysts should eliminate project
proposals that are:
Technically unsound & risky
Projects that have no market for their outputs
Have inadequate supply of inputs
Very costly in relation to benefits
Assume over ambitious sales and profitability
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Mortality of new project ideas
No. of ideas
Screening
Appraisal
Selection
Time
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End of Chapter 3
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