The first step of project management is project identification and appraisal which is also often called project feasibility analysis. This comprises the following elements:
(1) Generalization of project ideas
(2) Screening of the generated ideas
(3) Detailed evaluation of the screened projects ideas.
This first step, besides providing an inventory of ideas also facilities the basic structuring process so that only the ‘right’ projects enter into further detailed analysis. The generation of project ideas can come only through the objectives which need to be achieved by the authorities planning the investment in the project. The basic structuring process is provided by the ‘objectives’ of the nation or a region or an organization. Unless clarity of the objectives (either long run or short run) is achieved, the crucial project ideas may not be considered. The resources available are limited whether it is small organization, or a region or a nation. Therefore a thorough exercise right in the beginning of the generation of project ideas is absolutely essential, if the limited resources are to be properly utilized. A project is generally a heavy investment and long term proposition unless it happens to be a short term project such as maintenance project. For instance, a nation has to be clear whether it wants to invest in heavy industry which will yield fruits only after a very long term, or whether it wants to invest heavily in short term yielding and labor intensive projects in agricultural or rural developments. Even in agriculture one may think of either a major irrigation or minor irrigation projects in terms of their relative emphasis. The overall and specific objectives of the national or regional or organizational policy drive the ideas generating machine.
A company has to ask, for instance, what kind of business am I in, because the company cannot have a number of businesses due to limitations of monetary resources. A proper target market orientation or market segmentation probably needs to be done in a broad manner right in the beginning of the exercise of project management. The public works projects may be the result of two broad categories of policy objectives: (1) socio-economic policy objectives, (2) internal and external security policy objectives. The former objective of socio economic policy could be brought about by: (1) providing extension of markets and achieving higher level of utilization of resources and (2) by increasing factor and product mobility. The second objective of improving internal and external security can be brought about by the Public Works Department by providing extended facilities for the mobility of security resources. Such objectives need to be concretely spelt out and the priorities amongst the objectives should b established; otherwise the idea generation may be an exercise in the wilderness.
During the idea generation stage, the ideas arising within the objectives need to be tempered or filtered simultaneously by the constraints present for the nation or the region or the organization. The constraints are of the following types:
(1) Constraints pf physical resources
(2) Constraints of human resources and organizational (structure/cultural) constraints, and
(3) Constraints of financial resources
The various project ideas must lie within the limits defined by the constraints. The effect of this is to limit the number of ideas to a feasible minimum.
The process of generating ideas should, so far, have been carried out without any inhibitions and preconceived notions, excepting the guiding and creative influence of objectives and constraints. This process should by now provide the analyst with enough ideas to work on.
Not all project ideas need to be analyzed in detail, though. At a point of time, for a particular region, society, nation, or for an organization certain things are of higher priority than others. For instance, in the border areas of our country the priority is for security against external aggression. Development of the economy of the region would be of second priority. Of course, much depends upon the particular time, the internal and external political affairs of the region or state or the environment in which the organization or company may be working etc. But it should be understood that the measures of priorities, however, crude will proved the analysts with a means to find out clearly which project idea needs to be primarily considered and which should only be of secondary or tertiary interest. These primary projects provide us with a shorter list of project ideas that need to be evaluated further in such detail.
Another screening which needs to be applied to this short list is the existing facilities thus eliminating project ideas which would essentially be duplication of the existing ones. In this analysis the following criterion may be applied.
The criterion is that of effective capacity, which is weighing various elements of the exiting facilities to determine how adequately the priority objectives are being met. A new project should be considered to the extent the existing facilities fall short of the demand for the particular priority objective. The criterion of effective capacity can be easily understood for the public systems projects. For commercial organizations these may need to be supplemented by a thorough study of the market.