CHAPTER THREE

PROJECT IDENTIFICATION

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Introduction to Project Identification
Definitions
• Project identification is the process of searching
for and subsequently finding potential projects.
• Identification of opportunities requires
imagination, sensitivity to environmental changes,
and realistic assessment of what the firm can do.
• The Goal of Project identification is to:
 Identify existing gaps
 Generate useful information
 Accomplish analysis of data, and
 Bring to light ideas for potentially viable projects
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Introduction to Project Identification
• Focuses on
 Analysis of relevance of project ideas, which includes an
analysis of the stakeholders and of the likely target groups
and beneficiaries,
 Analysis of the situation, including an analysis of the
problems they face,
 The identification of options and relevant projects and
partners to address these problems.

• The outcome is a decision on whether or not the

option(s) developed should be further studied in
detail.
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 Your Reflections

Who and how Project idea is

identified?

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 Who and how Project idea is identified
 Observation of existing opportunities and problems
 Policies review and opportunity studies by Government
agencies
 Sectorial strategies and sub-sectorial programs of
technical ministries (like health, agriculture, tourism,
education, industry, etc..)
 Conducting survey
 Review of past projects
 Private sector, cooperatives, and state enterprise plans
 Investment identification missions by development banks
and agencies
 Brainstorming (unsystematic discussions)

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Who and how Project idea is identified
 Observation of constraints, problems, and limiting
factors/bottlenecks;
 Need analysis (existence of unsatisfied demand)
 Need to tackle unexpected or undesirable events
(drought, earthquake, flood, natural catastrophes, and
other similar hazards).

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Macro and Micro Sources of Project idea
Macro sources of project idea
A. Major Macro Sources:
– Federal/Central or Regional Governments
– Bilateral and Multilateral Agreements
– International Development Agencies
• Government is the major source of project ideas in
developing countries.
• Reasons:
– Has the necessary resources for undertaking opportunity
studies (conduct survey, studies, and reviews)
– Better access to data and information
– Familiar with the development objectives, priorities, and
strategies. 7
Macro and Micro Sources of Project idea
Macro sources of project idea
B. Other Macro Sources:
– National policies, strategies, and priorities articulated by
government from time to time.
– National, Sectorial, sub-sectorial, or regional plans and
strategies
– General surveys, resource potential surveys, regional studies,
master plan and statistical publications.
• Constraints on the development process due to shortage
of essential infrastructure facilities, problems in the
balance of payment, etc.
• Government decisions to correct social and regional
inequalities or to satisfy basic needs of the people
through development projects. 8
Macro and Micro Sources of Project idea
Micro sources of project idea
• Private and Public Enterprises
• Local Groups or Organizations
• Consumer Groups and Associations
• Financial Institutions/Credit Associations
• Cooperatives, Farmers’ Unions,
• New Technology Suppliers, and
• Individuals, etc….

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Macro and Micro Sources of Project idea
Micro sources of project idea
Driving forces behind:
– Identification of unsatisfied demand or needs
– Existence of unused or underutilized natural resources
– Need to remove shortages in essential materials,
services, or facilities that constrain development efforts
– Initiatives in response to incentives provided by the
government
– Necessity to complement or expand investments
previously undertaken

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Macro and Micro Sources of Project idea
Micro sources of project idea
Techniques (or mechanisms) adopted:
– Analyse the performance of existing industries;
– Examine the inputs and outputs of various industries
– Review imports and exports
– Look at the suggestions of financial institutions and
development agencies
– Investigate local materials and resources
– Analyse economic and social trends
– Study new technological developments
– Draw clues from consumptions abroad
– Attend trade-fairs (trade promotions or bazaars), etc.
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 Process of Project idea generation
• Identification studies may involve area studies,
industry studies, resource-base studies, and
sectorial studies.
• The process involves surveying, reviewing, and
analysing existing policies, resource
endowments, and socio-economic variables
– Socio-Economic Variables: various socioeconomic
factors (housing facilities & standards, utilities
services, health and nutrition services, and income
distribution).

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Process of Project idea generation
– Field survey and interview
– Observing and analysing prevailing situation
– Participating in deliberations, discussions, and
trainings
– Brainstorming
– Exposures to publications & media
– Informal discussions and meetings

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 Process of Project idea generation
• However, need to note that;
– Every idea may not be feasible and/or
practicable.
– Some of the project ideas might be felt feasible.
– These ideas need to be ranked and/or
prioritized.
• screening of potentially promising ideas.

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 Process of Project idea generation
Approaches:
A. Top-down Approach
• Projects are identified at higher planning (or macro)
level and implemented at the decision of top officials.
• Projects are identified based on the national plan
and strategies.
– For clearly visible problems, there is no need to go
down…..may not relate to the existing reality.
– Often have long-term orientations.
– May encounter resistance and/or implementation
constraints as the people in the context might lack
interest to cooperate with.
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 Process of Project idea generation
Approaches:
B. Bottom-Up Approach
• Requires base line survey of resources, key development
problems, and resources.
• Based on the realities existing in the respective locality.
• May focus on short-term or long-term problem solving,
fulfilment of unsatisfied needs, etc.
– Such projects might be easy to implement due to their fitness to the
reality in a given context.
– Project’s benefits might easily be visualized by the society.
– Might be successfully implemented – likely to get substantial
community support.
– Might help to create good will (positive images) towards the
institution/the promoter.
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 Screening Potential Projects Ideas
Screening Criteria:
✓ Compatibility with the promoter
✓ Consistency with government priorities
✓ Availability of inputs
✓ Adequacy of market
✓ Reasonableness of costs
✓ Acceptability of risk level

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 Screening Potential Projects Ideas

Eliminate project proposals that:

✓Are technically unsound and risky
✓Have no market for their outputs
✓Have inadequate supply of inputs
✓Are very costly in relation to the expected benefits
✓Assume an overambitious sales and profitability
target

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Stakeholders, Problem, Objectives, and
Strategies Analysis
• Project identification involves several analysis:
1. Stakeholder Analysis
2. Problem Analysis (image of reality)
3. Analysis of Objectives (image of an improved
situation in the future)
4. Analysis of Strategies (comparison of different
options to address a given situation).

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 Stakeholder Analysis
• Stakeholders: any body who is affected by the impact of
an activity and/or who can influence the impact of an
activity
• Stakeholders are:
 individuals or groups with a direct, significant and
specific stake or interest in a given territory or set of
natural resources and, thus, in a proposed project.
 People affected by the project
 People who can influence the impact of an activity
• Participation or stakeholder analysis seeks to identify the
major interest groups involved (all those affected by or
involved) in the project.
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 Stakeholder Analysis
The key Players
• The project manager
– responsible for achieving project objectives.
– Manages the project:
• Planning, organizing, leading, controlling
(monitoring progress)
• Communicating, balancing conflicting
requirements, managing stakeholders,
building & inspiring the team
• Sharing success, accepts all blame!

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 Stakeholder Analysis
The key Players
• Sponsor: the person or group that provides the financial
resources, in cash or kind, for the project
– Project Initiator
– Ensures project relevance
– Helps in objectives setting
• Customer/user/client: the person or organization that will use
the project/s product.
• Performing organization: the enterprise whose employees are
most directly involved in doing the work of the project.
• Project team members: the group that is performing the work
of the project
• Project management team: the members of the project team
who are directly involved in project management activities
• Potential opponents: Groups which may oppose or obstruct a
project.
• Supplier: Provides resources
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 Stakeholder Analysis

• It is a four-step process
Identify key stakeholders
Assess stakeholder interests and the potential
impact of the project on these interests
(expectations, benefits, willingness to mobilize
resources, interests)
Assess the stakeholder influence and
importance (power, control of strategic
resources)
Outline stakeholder participation strategy
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Stakeholder Analysis

Core issue

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 Problem Analysis
• What is the problem to be addressed?
• What as the event or series of events that was a
catalyst for action?
• Is it a problem or crisis that demands immediate
attention?
• Is the problem one of national security, economic
development, diplomacy?
• What interests are at stake for the actor (e.g. state)
overall?

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 Problem Analysis
• State the problem meaningfully:
 Determine the magnitude and extent of the problem
 Continually re-define the problem in light of what is
possible
 Question the accepted thinking about the problem
 Question initial formulations of the problem
 Say it with data
 Clear definitions allow people to communicate with one
another
 Measures are important for clarification (e.g., how many
people are living in poverty)

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 Problem Analysis
• State the problem meaningfully:
– Politics of problem definition
• Based on perspectives
– What will change in the future?
• Projections and forecasting
– Think about causes
• Must ask why the problem came about
• Answers may help determine how to resolve problem
• Often problems have multiple causes; conflict over
which one to address

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 Problem Analysis
• Steps in problem analysis:
1. Agree on the main problem
2. Identify the causes of the main problem by asking ‘But
why?’
3. Identify the effects of the main problem by asking ‘So
what?’ until we can go no further.
4. Copy the complete tree on a paper
– Establishing a hierarchy of problems in a problem tree
helps to form a base for the objectives.

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 Problem Analysis
• To establish the hierarchy of problems in the light
of the cause and effect relationships to find the
focal problem
• Identification of priority problem
• Problem analysis
– Problem tree
– Solution/objectives tree
• Linking the solution/objectives tree to Log frame.

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 Problem Analysis
• Example

By: Didha Bacha 30

 Problem Analysis
• Example

By: Didha Bacha 31

 Objectives Analysis
• A process to
– determine the objectives parallel to the
problems by stating the problems in positive
terms and
– form an objective tree (solution tree) in the light
of ends and means relationships.

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 Objectives Analysis
• From Problem to Objective/solution

Problem Objective

High rate of child deaths To reduce the rate of child deaths

High rate of To reduce the rate of

İnfectious disease infectious diseases

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 Objectives Analysis
• Objective Tree
 Technique to describe the future situation that will be
achieved by solving the problems
 Turning negative conditions into positive in a certain time

Overall Objective

Project Objectives

Activities

Outputs

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Strategy Analysis/Alternative Analysis

• Identify differing means-ends ladders, as possible

alternative options or activity components
• Eliminate objectives that are obviously not desirable
or achievable.
• Eliminate objectives being pursued by other
development activities in the area.
• Discuss the implications for affected groups.

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 Strategy Analysis/Alternative Analysis

• Make an assessment of the feasibility of the

different alternatives
• Select one of the alternatives as the activity
strategy.
• If agreement cannot be reached, then introduce
additional criteria alter the most promising option
by including or subtracting elements from the
objectives tree.

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