Sheger College

Masters of Project Management

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Project identification,
Analysis and Appraisal

Zinashbizu L. (PhD)
 CHAPTER ONE
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Zinashbizu L. (PhD)
 Project Identification /Conception
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⚫The first step/phase in the project life cycle is to

identify project ideas and develop project
portfolios from which feasible projects are going to
be selected.

⚫Therefore, This is the conception stage in a project’s

life cycle.

⚫This is a stage where one project-idea out of several

alternatives is chosen and defined.

Zinashbizu L. (PhD)
 Cont….
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Projects ideas can be identified either from:

Problems are undesirable situations

that prevent the organization from
fully achieving its purpose, goals
a problem and objectives
or
opportunity Opportunities are chances to improve
the organization even in the absence
of specific problems.

Zinashbizu L. (PhD)
 Cont….
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Furthermore, project ideas are born at two

levels

Micro level sources: Project ideas originated at

individual or household level that can be further
developed through discussion with friends and
colleagues.

Macro-level Sources: Project ideas originated by

institutions at regional or federal level.

Zinashbizu L. (PhD)
 Ways to find good project idea
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 Identifying good project ideas that can be translated to

viable project requires looking in to a wide variety of
sources.

 Some of the sources to look in to in finding good project

ideas includes:

A. Analyze the performance of existing industries:

⚫ A study of existing industries in terms of their

profitability and capacity utilizations indicates promising
investment opportunities or about the potential for
further investment.
Zinashbizu L. (PhD)
 Ways to find good project idea….
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B. Examine the inputs and outputs of various industries:

Opportunities exist when:
i. Materials, purchased parts or supplies are presently
being procured from distant sources with attendant
time lag and transportation cost.
ii. 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.
iii. A study of the output of the existing industries may
reveal opportunities for adding value through further
processing of the main outputs.
Zinashbizu L. (PhD)
 Ways to find good project idea….
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C. Review import and exports:

⚫An analysis of import statistics for a period of five and
above years is helpful in understanding the trend of imports
of various goods and the potential for import substitution.
⚫Indigenous manufacture of goods, which are 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.
Zinashbizu L. (PhD)
 Ways to find good project idea….
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D. Analyze Economic and Social Trends:

⚫Changing economic conditions and consumer
performances provide new business opportunities.
⚫For example, the increasing desire for leisure and
recreational activities.
⚫This has caused a growth in the market for recreational
products and services.
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.
Zinashbizu L. (PhD)
 Ways to find good project idea….
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F. Attend trade fairs:

o 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:

o New product ideas may be generated by thinking along the
following lines:

 Modification, rearrangement, reversal,

magnification, reduction, substitution, adoption and
combination.
Zinashbizu L. (PhD)
 Ways to find good project idea….
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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.

Zinashbizu L. (PhD)
 Types of analysis in project identification
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⚫ Project Identification is often the outcome of a triggering

process rather than an analytical exercise.

Problem analysis
To stimulate the
flow of ideas, the Stakeholder analysis
following analysis
are very helpful Objective analysis
towards the
establishing of a Alternative analysis
successful venture:
SWOT analysis

Zinashbizu L. (PhD)
 1. Problem Analysis (Situation Analysis)
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⚫ 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.

⚫ The problem analysis identifies the negative aspects of an

existing situation and establishes the „cause and effect‟
relationships between the identified problems.
Zinashbizu L. (PhD)
 1. Problem Analysis (Situation Analysis)
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⚫In formulating problems, existing problems should be

identified and will serve as source of project idea. i.e. ...

⚫Identification of the major problems faced by target

groups and beneficiaries (What is/are the problem/s ?
Whose problems ?); then....

⚫Visualization of the problems in form of a diagram, called

a “problem tree” or “hierarchy of problems” to help
analyze and clarify cause–effect relationships.

Zinashbizu L. (PhD)
 Problem tree- used to analyse river pollution
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Catch & income of High prevalence of

fishing families decline water borne disease
Effect

River ecosystem under

serious threat including
decline fish stock

River water quality is Problem

deteriorating

High level of solid wastes
dumped in to the river
Wastewater treated in
Most households & factories discharge
plant doesn’t meet
waste water in to the river
Env’tal standards

Polluters are Polluters are not aware 40% of house holds Cause
not controlled of the danger of waste Existing legal regulations are & 20% of businesses
dumping in to the river inadequate to prevent direct not connected to
discharge of waste water sewerage networks
Env’t protection
agency Inadequate level of capital
No public education or Pollution has been low
inefficient & investment & poor business
awareness creation program political priorities
ineffective Zinashbizu L. (PhD) planning within local g1o3v’t
 2. Stakeholder Analysis
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⚫Stakeholder analysis is a useful tool or process for

identifying stakeholder groups and describing the nature
of their stake, roles and interests.

⚫Stakeholders are individuals, groups or organizations who

have an interest or stake in a project.

⚫They may be direct or indirect interests, and positive or

negative.

⚫Their stake in the project may be in terms of their rights or

duties or they may be affected by the outcome.

Zinashbizu L. (PhD)
 2. Stakeholder Analysis…..
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⚫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

Zinashbizu L. (PhD)
 3. Objective Analysis
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 After defining project problems and identifying stakeholders, the

next step is to analyse the objectives.

 The project purpose/goal is developed by restating the core

problem in positive terms or by articulating the effects of the
problem in positive terms.

 The objective analysis is the positive reverse image of the

problem analysis.

 If care has been taken on the problem analysis, the formulation

of objectives shall not result in any difficulties.
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Zinashbizu L. (PhD)
 3. Objective Analysis….
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⚫At objective analysis, the ‘negative situations’ of the

problem-tree are converted into solutions and
expressed as ‘positive achievements’.

⚫These positive achievements are in fact objectives,

and are presented in a diagram of objectives showing
a means-to-ends hierarchy.

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Zinashbizu L. (PhD)
 Purposes

Results

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Zinashbizu L. (PhD)
 4. Alternative or Strategy Analysis
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⚫The purpose of this analysis is to identify possible

alternative options/strategies, to assess the feasibility and
agree upon one project strategy.

⚫This analytical stage is the most difficult and challenging,

as it involves making a complex judgment about the best
implementation strategy (or strategies) to pursue.

⚫In practice a number of compromises often have to be made

to balance different stakeholder interests and practical
constraints such as the likely resource availability.

Zinashbizu L. (PhD)
 4. Alternative or Strategy Analysis…..
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⚫ The type of questions that need to be asked and answered at this

stage might include:
a. Should all the identified problems and/or objectives be tackled,
or a selected few?
b. What are the likely capital and recurrent costs
implications of different possible interventions, and what can
realistically be afforded?
c. What is the most cost effective option(s)?
d. Which strategy will impact most positively on
addressing the needs of the target groups?
e. How can potential negative environmental impacts best be
mitigated or avoided?
f. What benefits will be expected from each option?
Zinashbizu L. (PhD)
 5. SWOT Analysis
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 A SWOT analysis is a strategic planning technique that

project managers can use to help them analyze their projects'
strengths and weaknesses, as well as any opportunities and
threats they may face.

 It involves identifying the internal and external factors

that are favorable and unfavorable to achieve the
objective.

 Incorporating SWOT analysis in project management can

help you improve your project planning, reduce project
risk, and increase the likelihood of overall project success.
i.e. Zinashbizu L. (PhD)
 5. SWOT Analysis…..
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SWOT analysis groups key

pieces of information into
two main categories:

Internal factors: The External factors: The

strengths and weaknesses opportunities and threats
internal to the presented by the external
organization. environment to the organization.

Zinashbizu L. (PhD)
 A. Strength:
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⚫ It is something the organization does well relative to competitors

and that set your project or business up for success.

⚫ Are the characteristics of the business or team that give it an

advantage over others in the industry.
⚫ It arises from resources and competencies available in an
organization. It create strategic advantage.
 Patents
 Good Reputation
 Cost advantages
 Exclusive access to high grade natural resources
 Favorable access to distribution networks
Zinashbizu L. (PhD)
 B. Weakness:
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 It is something the organization does poorly relative to

competitors and place the firm at a disadvantage
relative to others.

 It arises from deficiency in resources and competencies.

 It creates strategic disadvantage.

 Lack of strong protection
 A weak brand name
 Poor reputation among customers
 High cost structure
 Lack of access to the best natural resources
 Lack of access to key distribution channels
Zinashbizu L. (PhD)
 C. Opportunities:
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 It is the majorfavorable situation in an organizations

external environment that could help your project succeed.
 It provides position of superiority.
 An unfulfilled customer need
 Arrival of new technologies
 Loosening of regulations
 Removal of international trade barriers

 Are external chances to make greater

sales or profits in the environment.
Zinashbizu L. (PhD)
 D. Threats:
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⚫It is a major unfavorable situation in an organization's

external environment that could cause trouble for the
business.

⚫It provides position of inferiority.

 Shifts in consumer tastes away from the firm’s products
 Emergence of substitute products
 New regulations
 Increased trade business

Zinashbizu L. (PhD)
 Opening up the alternatives
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• The project identification and preparation process will

initially involve choice between alternative forms of
intervention or project strategy.

• In opening up the alternatives it is useful to consider as

many different routes as possible, some will be
discarded almost immediately, but others may introduce
new ideas and insights which may contribute positively
to the final project design.

Zinashbizu L. (PhD)
 Opening up the alternatives…
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• The following process is suggested for opening up the

alternatives.
1. Listing as many likely alternatives as can be
thought of.
The range of options is likely to broaden if ideas are
drawn together from a wide range of sources.

 Brainstorming within the project planning team,

with government agencies, non-governmental
contacts and with intended beneficiaries should
be cultivated.
Zinashbizu L. (PhD)
 Opening up the alternatives…
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• The following process is suggested for ….

2. Consideration of each alternative with a view to
eliminating some and combining others.

 At this stage consideration of each alternative will

strengthen the justification for and scope of the
one which is eventually selected.

Zinashbizu L. (PhD)
 Opening up the alternatives…
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• The following process is suggested for ….

3. Selection of promising alternatives for preliminary
formulation.
 The alternatives listed in step 1 may arise from an
analysis of existing constraints.
 One essential choice to consider is whether an
intervention in the form of a project is in fact necessary
or desirable.
 Alternatives may also be joint or complementary in
terms of the approach required.
Zinashbizu L. (PhD)
33

End of the Thank

chapter you!!!

Zinashbizu L. (PhD)