PART-II

PROJECT
ANALYSIS

Project Initiation

The first phase in the project life cycle is

project initiation.

This

creating a new
project by defining the business
problem or opportunity to be
addressed, the solution to be
delivered and the scope within
which
the
project
will
be
undertaken.
phase

involves

Project Identification

1.
2.
3.

This is the conception stage in a projects life cycle.

At this stage, there are three main steps that should
take place.
Identification of needs and problem recognition.
Formulation of objectives that projects should aim at
Identification of suitable projects whose desirability
and suitability should conform to the established
objectives.
In this sense, projects are actually designed to
solve specific problems and/or to meet the
particular needs of a society, a country or an
individual.

Project Identification

The first step in the project cycle is to

identify candidate project ideas and
develop project portfolios from which
feasible projects are going to be selected.
This is a stage where one project-idea out of
several alternatives is chosen and defined.
It
involves
identifying
environmental
problems to be addressed and the needs
and interests of possible beneficiaries and
stakeholders.

Project Identification

The search for promising project ideas

is the first step towards establishing a
successful venture.
Identifying suitable project ideas is the
most important and crucial step in the
whole process of project preparation.
Identification of opportunities requires
imagination,
sensitivity
to
environmental changes, and realistic
assessment of what the firm can do.

Project Identification
Projects are identified because either
We see a problem or an opportunity
Problems are undesirable situations that prevent the organization
from fully achieving its purpose, goals and objectives
Opportunities are chances to improve the organization even in the
absence of specific problems.
Generally, project ideas are born at two levels, the micro-level and
macro-level.
Micro level sources- Project ideas originated at individual or
household level that can be further developed through discussion
with friends and colleagues.
Macro Sources: Project ideas originated
by institutions at
regional or federal level.

Project Identification
Sources of project ideas
Identification is often the outcome of a
triggering process rather than an
analytical exercise.
1.
2.
3.
4.
5.

Situational/ Problem analysis

Stakeholder analysis
Objective analysis
Alternative analysis
SWOT analysis

Project Identification
1. Situation/Problem analysis :

Problem analysis is a critical step in the project

identification process and is an important sources of
project idea.
On the basis of available information, the
existing situation is analysed: that is, the major
problems are identified and the main causal
relationships between these are visualized.
It is important that all possible options remain open
during the problem analysis. The aim at this early
stage is to establish an overview of the situation.
In formulating problems, existing problems should
be identified and will serve as source of project idea.

Project Identification
A.

Analyze the performance of existing

industries:
A study of existing industries in terms of their
profitability
and
capacity
utilizations
indicates promising investment opportunities.
An examination of capacity utilization of
various industries provides information about
the potential for further investment.
Such a study becomes more useful if it is done
region wise, particularly for products which
have high transportation costs.

Project Identification
B. Examine the inputs and outputs of various
industries: An analysis of the inputs required for
various industries may throw up project ideas.
Opportunities exist when:
a) materials, purchased parts or supplies are presently
being procured from distant sources with time lag and
transportation cost and
b)
several
firms
produce
internally
some
components/parts which can be supplied at a lower cost
by a single manufacturer who can enjoy economies of
scale.
c) Similarly, a study of the output of the existing
industries may reveal opportunities for adding value
through further processing of the main outputs.

Project Identification
C. Review import and exports: An analysis of import
statistics for a period of five to seven years is helpful
in understanding the trend of imports of various
goods and the potential for import substitution.
Indigenous manufacture of goods currently imported
is advantageous for several reasons:
(i) it improves the balance of payments situation,
(ii) it generates employment, and
(iii) it provides a market for the supporting industries
and services.
Likewise an examination of export statistics is useful
in learning about the export possibilities of various
products.

Project Identification
D. Analyze Economic and Social Trends: A study
of economic and social trends is helpful in
projecting demand for various goods and

services.

Changing economic conditions and consumer

performances
provide
new
business
opportunities.
Another change that can be seen is the increasing
desire for leisure and recreational activities.
This has caused a growth in the market for
recreational products and services.

Project Identification
E. Draw Clues from Consumption Abroad: Entrepreneurs
willing to take higher risks may identify projects for the
manufacture of products or supply of services which are new to
the country but extensively used abroad.
F. Attend trade fairs: national and international trade fairs
provide an excellent opportunity to get to know about new
products and developments.
G. Stimulate Creativity for Generating New Product Ideas:
New product ideas may be generated by thinking along the
following
lines:
Modification,
rearrangement,
reversal,
magnification,
reduction,
substitution,
adoption
and
combination.
H. Government policy: In the planned economy, the government
plays a major role in the industrial development and spells out
priorities for the economy and lays the framework for
development and resource allocation, which in turn can serve as
sources of project ideas

Project Identification
2. Stakeholder Analysis:

Analyzing the stakeholders who need to be involved is one of the

most crucial elements of any project planning.
Stakeholder analysis is a useful tool or process for identifying
stakeholder groups and describing the nature of their stake, roles
and interests.
A stakeholder can be defined as: any person, group, organization
or institution with a direct interest or stake in something.
The aim of stakeholder analysis is to:
Identify and define the characteristics of key stakeholders
Assess the manner in which they might affect or be affected by
the proposed outcomes.
Understand the relationship between stakeholders
Assess the capacity of different stakeholders to participate.
Ultimately TO IDENTIFY THEIR UNFULFILLED NEEDS.

Project Identification
Some potential groups who may be
considered are:
1. Users groups - people who use the
resources or services of the firm.
2. Beneficiaries
3. Intermediaries

Project Identification
3. Objective analysis
After defining project problems and identifying
stakeholders, the next step is to
analyse the
objectives.
From objective analysis, the findings and gaps may
be transformed into a specific project idea.
In objective analysis, the aim is to ensure the
relevance and timeliness of objectives.
A clear articulation and prioritization of objectives
helps in channelizing the efforts of employees &
helps them to think more imaginatively.

Project Identification
4. Alternatives Analysis:
Project identification is the stage where
one
project-idea
out
of
several
alternatives is chosen and defined.
The purpose of alternatives analysis is
to identify most possible alternative
projects
options,
assess
their
feasibility and agree upon on one
project.

Project Identification

5. SWOT Analysis
SWOT is an acronym for strengths,
weaknesses, opportunities and threats.
It represents a conscious deliberate and
systematic effort by an organization to
identify opportunities that can be
profitably exploited by it.
Periodic SWOT analysis facilitates the
generation of idea.

Project Identification

The ideas which sounds relatively most

promising must be put under SWOT analysis.
SWOT analysis is a tool used to evaluate the
Strengths, Weaknesses, Opportunities, and
Threats involved in a project idea.
It involves specifying the objective of the
business venture or project and identifying the
internal and external factors that are favorable
and unfavorable to achieve the objective.
A SWOT analysis must first start with defining a
desired end state or objective.

Project Identification
The aim of any SWOT analysis is to identify the key internal and

external factors that are important to achieve project objectives.

SWOT analysis groups key pieces of information into two main

categories:
Internal factors The strengths and weaknesses internal to the
organization.
External factors The opportunities and threats presented by the
external environment to the organization.
Strengths: characteristics of the business or team that give it an
advantage over others in the industry.
Weaknesses: are characteristics that place the firm at a
disadvantage relative to others.
Opportunities: external chances to make greater sales or profits
in the environment.
Threats: external elements in the environment that could cause
trouble for the business.

Project Identification

identification of SWOTs is essential

because subsequent steps in the process of
planning for achievement of the selected
project idea may be derived from it.
First, the decision makers have to
determine whether the objective is
attainable, given the SWOTs. If the
objective sounds NOT attainable a
different project idea must be selected and
the process shall be repeated.

Project Identification
A project idea may also originate from multiple sources.
For instance:
1. New experiments emerging from previous project
failures,
2. Expansion and replication of successful projects
tested locally or proven feasible in other developing
countries,
3. From the discovery of critical economic and social
bottlenecks of shortages, excess or idle resources,
4. Forward & backward linkages with existing projects.

Project initiation activities

Develop a

DEVELOP A BUSINESS CASE

1.

2.

3.

4.

The first step you need to take to initiate a

project is to develop a business case.
A business case is a document which justifies
the start-up of a project. It includes:
A description of the problem or opportunity that
exists in the business;
A list of the available options for delivering a
solution to resolve the problem;
A list of the costs and benefits associated with
each solution option;
A recommended solution option for approval.

Contd...

The business case is usually presented

by senior management in the business
to an identified business sponsor or
customer.

During the creation of a business case, it

may be necessary to undertake a
feasibility study.

Contd...

This process involves undertaking a more

detailed assessment of the current
business problem or opportunity, the
various solution options available and the
likelihood of each alternative solution
meeting the customers requirements.

The feasibility study adds more rigour to

the solution options defined in the
business case.

Contd....

The business case is referred to throughout

the project to determine whether the costs,
benefits, risks and issues align with those
originally documented.

At the end of the project, a postimplementation review (PIR) will be

undertaken to determine whether the
project delivered the business benefits
outlined in the business case.

UNDERTAKE A FEASIBILITY STUDY

The out come of the feasibility study could be:
a full description of the business problem;
a list of the requirements for a solution to fix the
problem;
a list of all available options for delivering a
solution;
an assessment of the feasibility of each option;
a list of the risks and issues associated with each
option;
the preferred solution option for implementation.

ESTABLISH THE TERMS OF

REFERENCE
The TOR outlines the purpose of the project,
the way it will be structured and how it will
be implemented. It describes the project:
vision, objectives, scope and deliverables
(ie what you have to achieve);
stakeholders, roles and responsibilities (ie
who will take part in it);
resource, financial and quality plans (ie
how it will be undertaken).

APPOINT THE PROJECT TEAM

Having
completed
the
terms
of
reference, you will now have a very clear
understanding of the types of project
roles required and number of people
required to fulfil each role. The next step
is to appoint people to these roles, to
carry out the project.

SET UP THE PROJECT OFFICE

The project office is the physical

premises within which administrative
project staff such as the project manager
and project support staff reside.
The project office also contains the
communications
infrastructure
and
information technologies required to
support the project.

PERFORM A PHASE REVIEW

Phase review forms should be completed
at the end of the following project
phases:
project initiation;
project planning;
project execution.

Contd...
It is not necessary to complete a phase review
form at the end of the project closure phase as
approval to close the project is covered in the
project closure report. The phase review form
should describe the status of the:
overall project;

project
project
project
project
project
project

schedule;
expenses;
staffing;
deliverables;
risks;
issues.

End of part two