Home EDUCATION Project Identification Process

Project Identification Process

project identification process
project identification process

Project Identification Process

Project Identification is a continuous and repetitive process involving screening, documentation, validation, ranking and approval of viable project ideas for an organization.

“The systematic effort of screening the ideas generated through various sources and bringing out most viable and feasible alternative project ideas in the domain of Project Identification” While examining the filtered project ideas for further approval, it is imperative to check on the availability of resources and potential skills to execute the project and make it realisable.

It is futile to select such an idea for which potential skills are either unavailable and or resources are insufficient to deploy. Thus, identifying a worthy project idea is not a simple mechanism but rather calls for a conscious and robust investigation on the part of the organisation

Project Identification Process

1. Steps in project identification

Project ideas are like other ideas don’t take concrete shape immediately. An idea is first born, it is under incubation for some time, and consequently, it begins to take some definite shape. This process of project identification can be broadly divided into four stages.

In the conceptual stage, a number of project ideas are generated through interaction amongst various groups of intellectually and entrepreneurially inclined people in the organisation having good knowledge and concern about the field where contributions are sought. .

In this context, one has to examine the potentialities of development and the problems, needs and aspirations of the people in the concerned area. For example in an Aerodrome project in the vicinity of a developing city the problems that the people of that city will face due to the impact of noise pollution, traffic, evacuation from the area to other non-developed areas have to be considered.

The second stage, the project ideas generated above are screened and a preliminary exercise is conducted to weed out the bad or unviable ideas. Therefore, it is understandable that all the given project ideas would not pass the screening test and only few get short listed for further examination. Such short listed ideas will be considered while promoting pre-feasibility studies.

The third and fourth stages can be termed as investment opportunity study It is a preliminary level investigation, yet extensively conducted to analyse fundamental strengths of the project idea, and to explore various opportunities of the project. It has a limited objective of providing planners with a choice of project alternatives from which they can make a selection.

Pre-feasibility study focuses on answering the essential questions such a should we proceed with the proposed project idea? What are the benefits and drawbacks of proposed project idea? How much time will it take to conduct the preliminary study le, pre-feasibility study on the financial and other related economic aspects of the project viability.

In order to support those prefeasibility studies, all the organizational efforts get directed towards compiling suitable answers to those questions. After gaining confidence through the answers so supplied, a pre-feasibility study will be commenced either by the internal sources or by outsourcing to consultants. Furthermore, upon the satisfaction of prefeasibility report, a detailed feasibility studies can be conducted to document a detailed project report.

2 Importance of project identification

Project identification helps solve major problems in the planning stage and addresses to meet diverse needs, while setting clear objectives of proposed project Good projects act as catalysts for economic growth and development, which help to streamline the fruitful ideas through appropriate actions and achieve the desired results.

This encourages creativity and innovation so as to optimise the resources utilisation that is available in the economy viz manpower, capital, and raw materials and so on.

Project identification helps the management in the following ways:
  • Identifies and analyses the purpose and scope of a project in the given situation of an organisation or an economy.
  • Encourages value addition to the existing wealth and capital of an organisation or economy as the case may be through raising more funds for project execution.
  • Encourages multi-cultural environment and gives scope of social and cultural compatibility in the organisation as well as economy.
    Improves and develops the specific and general infrastructure of an organisation and the economy.
  • Determines basic benchmarks for deciding on various types and forms of project ideas to materialise.
  • Helps to identify size of investment and indicates on the complexity of the project.
  • Helps define the location and find appropriate technology to be used while executing the project.
  • Helps to formulate better marketing strategies to enhance profitability.
  • Identifies different constraints in project environment and formulation.
  • Evaluates the potential resources to convert an idea into reality.
  • Analyse the policies of government and various legal restrictions.

3 Sources for new project ideas

Following are some of the sources from which new project ideas may emerge

Performance of existing industries

The present trends and past experiences of industries provide a good indication about the health of a particular industry. Changing profitability structure and break-even analysis of industries offer adequate information about the financial health of various industrial sectors. This provides a superficial outlook on the industrial health, and thus a carefully forecasted trend lines help in determining the future prospects in emerging project proposals.

It is necessary to carefully analyse the changing phases of business cycles in which different industries play their respective roles from time to time. For example, the telecommunications sector especially mobile communications is growing tremendously in India having a mobile market crossing 5 billion by the beginning of 2012.

This ever growing market gives the investors good chance to innovate cheap and trendy designer mobile instruments that can withstand rigorous utility. Chinese manufacturers are taking advantage of this growing market by distributing mobile sets at moderate prices to attract the consumers.

Availability of raw materials

Availability of suitable resources is a must for any project to take off. Easy availability of good quality raw materials at cheaper prices is a boon for any project. Identifying appropriate technology and resource base will help design a good project idea and also make use of those untapped resources for the betterment of the organisation as well as economic health.

For example, Compressed Natural Gas (CNG) engines were innovated for the automobile sector as it was a feasible substitute for petrol. These new resources help the organisation have an edge over its competitors and also help the economy boost its GDP.

Availbilty of skilled labour

Not all project can be implemented universally.There are specific projects which need defined locations,specified enviromentalconditions and suitable manpower resources. For instance, cement manufacturing unit, automobile manufacturing unit, textile units, pharmaceutical units, sugar factories, power plants etc.

All these projects need not only good infrastructure base but also to be supported by appropriate technology and availability of suitable manpower. Gujarat state is suitable for Cement industries,

which is why most of the cement manufacturers are situated in that area to drain out chemical waste into sea waters. Mobility of manpower and also natural environment such as water and coal is a major challenge, which is why power projects are developed in the areas surrounded by water facilities and coal mines.

Solar and wind power projects are developed in Rajasthan and Shimla where abundant heat is produced through sand and sun and heavy winds pass through to produce power by maintaining good environmental and duly supported by UNIDO.

Import/export statistics

Statistics on international trade reveals the scope to evolve good projects. Fruits, handicrafts, cereals, pulses, drugs etc. all have equal opportunity to get exported as well as imported depending on the demand by the country from time to time. Therefore, a clear understanding on the routine and specific international transactions between various segments of society will make project ideas clearer and help reveal potential areas.

Usually any product having high imports can be thought as potential project proposal for indigenous development and vice versa. It may not be true in all cases. For example, 80% of the caprolactam (raw material used to manufacture Nylon filament yarn) gets imported in India and SRF thought of developing the project in the early 1990s but was unable to do so due to heavy cost factors. Sometimes, it is found that importing costs are less than cost of indigenous development

Price trend

Price of the product is a major driving force for any project to take off, Fundamentally every organisation will have twin focus, profit maximisation and cost minimisation. From both the angles it is the price that gets determined and thereby guides the project initiator on the functionality.

If the general price level is found to be rising over the past few years and a specific item is having a steeper rise, that would indicate a huge gap in the demand-supply and can be thought as a project opportunity.

Data from various sources

Various publications of government, banks, financial institutions, consultancy organisation, manufacturer’s associations, export promotion councils, research institutions, and international agencies contain data and statistics which may indicate prospective ventures.

A study of the balance sheets of existing companies will be useful in knowing the sectors of industry that are performing well. The study of profitability, break-even level, Earnings Per Share (EPS) of various industries may indicate those industries where opportunities exist for new investments Project identification precedes project initiation. Let us now discuss the concept of project initiation.


Please enter your comment!
Please enter your name here