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Plataforma de aprendizaje sobre inversiones (ILP)

Project identification

The purpose of project identification is to develop a preliminary proposal for the most appropriate set of interventions and course of action, within specific time and budget frames, to address a specific development goal in a particular region or setting. Investment ideas can arise from many sources and contexts. They can originate from a country’s sector plan, programme or strategy, as follow-up of an existing project or from priorities identified in a multi-stakeholder sector or local development dialogue. Identification involves:

  • a review of alternative approaches or options for addressing a set of development problems and opportunities;
  • the definition of project objectives and scope of work at the degree of detail necessary to justify commitment of the resources for detailed formulation and respective preparatory studies; and
  • the identification of the major issues that must be tackled and the questions to be addressed before a project based on the concept can be implemented.

Sufficient information on project options must be gathered to enable the government and financing agencies to select a priority project and reach agreements among stakeholders on arrangements for preparation work, including setting up steering committees or national preparation teams. The results of identification work should be summarized in a report, project brief or concept document, the format of which will depend upon the government’s and/or financing agencies’ requirements.

Why Identification Matters

Good identification is critical to project success. If there is insufficient focus on expected results, or if the potential of the most viable concepts has been overlooked at the identification phase, there is little prospect that they will be retrieved at a later stage, when the emphasis shifts from examining options to elaborating the details of a specific proposal. It can be costly and difficult to abort or radically revise a concept once preparation is underway. Pressure to proceed rapidly with project formulation, which can come from both governments and financing institutions, can lead to settling quickly on a specific concept before sufficient evidence has been assembled to confirm its validity. Many design-related problems encountered during implementation are the result of poor diagnosis of constraints, overly ambitious targets, time schedules and productivity projections, and insufficient scrutiny of political buy-in for the concept and institutional capacity issues. Consultation and involvement of stakeholders at the identification stage is essential to ensure appropriate concept selection and increase prospects for successful implementation and – ultimately – sustainability. Concept consideration needs to focus clearly on expected results and these should determine the appropriate interventions. In practice, concepts often start with ideas for interventions, and it is important to rapidly focus the view on expected results [see RBM]. Project ideas may arise from national strategies or plans, emerging needs or findings from evidence based analysis, evaluation findings and opportunities for scaling up.  

Major Steps in Identification

Major steps in identification, many of which will be pursued concurrently in the identification process, are:

  • review of the national and sectoral analyses, plans and priorities of both the government and the potential financing agency – for overall context and to identify overall goals and outcomes to pursue;
  • social analysis [see Social Analysis] – understanding the socio-economic context, and examining the dynamics of rural livelihoods, social diversity and gender in the context of agriculture and rural development;
  • stakeholder analysis – assessment of relevant stakeholders and institutions and their respective interests, roles and capacities to inform definition of outcomes and interventions. Mapping stakeholders can be a helpful analytical exercise, but care should be taken that preliminary analysis does not cement a status quo at the expense of developing a common vision for change; 
  • diagnosis and preliminary assessments of technical, institutional or socio-economic constraints and opportunities. Diagnosis of the underlying causes of the problems – for instance, by using a problem tree approach – and of the factors which underpin the opportunities;
  • preliminary definition of envisaged results of the investment, and overall project logic in a draft results framework [see RBM];
  • the definition of clear project objectives and related metrics is important to focus the discussion. The exact wording will be refined throughout design [see Design]. It should capture the essence of the concept and what the project will actually be able to achieve;
  • review of alternative possible solutions or development strategies;
  • review and assessment of relevant past and current development efforts and projects in the same or related fields or geographic area, considering the evidence base and lessons learned, in particular from evaluations of relevance to the present context [see Evaluate and Capitalize];
  • preliminary financial and economic analysis [see FEA];
  • consideration of major cross-cutting issues such as climate change, gender, nutrition and governance [see Gender Analysis and Nutrition], and delineation of how they will influence project scope and strategy.

Professional bias is a common problem in identification, as experts tend to focus on solution paths linked to their particular area of expertise. The identification team needs to have the breadth of expertise to be able to identify and undertake a preliminary screening of major alternatives. Further, close consultation with relevant stakeholders in the identification process at national and local levels is essential in order to ensure not only that identification draws upon the best available information (evidence base), but also that the evolving concept will reflect stakeholder concerns and aspirations, and that there is clear political and institutional buy-in to pursue a project with the envisaged focus. As early as possible the formulation team should also initiate contacts at field level with potential participants and beneficiaries of the proposed investment and with the stakeholders at community level. Encouraging active stakeholder participation in the identification process will also create buy-in, which enhances prospects of implementation success and sustainability.

A participatory workshop focusing on the results framework, using the logframe planning methodology or a similar approach [see RBM], is a useful method for harnessing resources and bringing together the perspectives of all stakeholders. This can effectively define stakeholders’ needs, set project objectives and the related project interventions, and promote understanding of the distribution of implementation responsibilities. It can also be used to identify knowledge gaps requiring further research and field survey and to assess likely resource availability and institutional capacity and community perceptions. 

Social analysis is most useful if it feeds into the identification process rather than being invoked at a later stage, as insights may have a determining influence on priorities and the approach to be pursued [see Social Analysis]. Where detailed social analysis cannot be undertaken at identification because of time or resource constraints, the team must draw upon the best and most relevant existing analysis available, and identify priority areas for more detailed analysis during preparation.

Guiding Questions for Identification

The following questions can help to focus identification work. Not all of these can be answered during the identification phase, but they should also be considered with a view to identifying further analytical work that will be necessary to inform subsequent formulation, should the concept be approved. Typical questions include:

  • Is the macroeconomic and policy context conducive to project success? Are the legal framework, governance and social setting compatible with successful implementation? What are the constraining factors?
  • Does the proposal fit national and sectoral policies and the strategy of the financing agency?
  • Have the constraints, problems or opportunities to be addressed been properly diagnosed and understood? Is there a clear link between the investments proposed and the priorities of beneficiaries and stakeholders [see  Social Analysis]? Will participants face constraints in embracing the envisaged options – linked, for instance, to social constraints, perceptions of risk, lack of personal resources or restricted access to resources or markets? Can the new opportunities that are envisaged compete successfully with other options open to the beneficiaries to improve their livelihoods, such as paid employment or urban migration?
  • Do the key stakeholders and institutions support the project idea? Are they committed to playing their envisaged roles in implementation? Do they have the funds, skills and other resources needed to do so? Will deploying these resources jeopardize other development activities to which they are also committed?  Can the project strengthen the institution sufficiently to carry out new as well as existing responsibilities effectively?
  • Is the basis for any envisaged technological change well established? Is it relevant to the specific target group and context ? If not, what type of additional analysis is required to inform investment choices?
  • Is there a real need for the investment – and if so, why has it not been made before? Are the proposed actions the most appropriate way of reaching stated goals and benefits? Are other lenders or donors already addressing, or about to address, the same issue? 
  • What has been done before and has it worked well or not ? What were the main constraints and success and success factors?
  • What is the potential contribution of the project to national economic development? Is there a rationale for public investment and for the involvement of international financing partners? What type of economic analysis needs to be carried out during preparation to inform and appraise design [see FEA]?
  • Do other donors need to be involved to enhance success – for instance, to align existing interventions, or to provide complementary support through technical assistance? 
  • Are the scale and time frame proposed for implementation realistic, especially in relation to institutional capacities? Would a testing or pilot phase be more appropriate before large-scale investment? Should targets be scaled down? Are government and stakeholder resources, as well as the natural resource base, likely to be adequate to sustain the proposed development after external funding ends?

Summarizing the Findings of Identification

The proposed concept should be presented in the format specified by the government and the financing agency. In recent years, financing agencies have adjusted formats to make them shorter and to focus on the key aspects necessary to review the concept prior to proceeding with more investment for detailed preparation. 

Within the concept note, or in a separate report, the following should be included: 

  • an explanation of the context in which the investment has been identified;
  • the reasoning processes which led the team to its conclusions;
  • general evidence that the proposed development will be attractive to the intended beneficiaries and that it can be implemented in the chosen setting;
  • any design alternatives from which to make the final choice of what to prepare in detail;
  • the issues to be resolved or decisions to be taken, and by whom, to finalize choices and clear the way for final preparation; and
  • a listing of further studies necessary to bring the chosen or recommended option to final preparation, including terms-of-reference, cost estimates, timetables and suggested responsibilities. 

The main text may be supported by working papers that provide further details on specific aspects, as well as relevant background data. 

Recommendations for further studies and information collection should focus on what is absolutely necessary, drawing as much as possible on existing information and analysis, as the accurate gathering and analysis of primary data and the conduct of surveys of all types is expensive and time-consuming.

Key Resources

Guidelines for the design of agricultural investment projects
(FAO, 1995)

The resource constitutes a help in the design of agricultural investment projects in developing countries covering the principles and processes of project design.

SWOT Analysis

Simple but useful framework for analysing the Strengths, Weaknesses, Opportunities and Threats

Problem Tree Analysis
(MDF, 2005)

Description of Problem Tree Tool with practical tips and an agricultural production/food security example

RuralInvest Module 1 - Participatory identification of local investment priorities
(FAO, 2006)

The module is primarily community-focused, particularly in the sense of supporting the creation of a local development plan which will inspire every specific project.

RuralInvest Module 2 - Preparing and using project profiles. A participatory approach to identifying
and preparing small scale rural investments (FAO, 2007)

The module provides guidance for preparing a project profile for each priority investment. Profiles provide enough information about the investment to allow both the applicant(s) and the eventual financing source to see which ideas have potential, and are thus worth the further effort and resources required to develop them in detail.

FAO Approaches to capacity development in programming: Processes and Tools - tool 7: Stakeholders’ Analysis (2012)

Stakeholders’ Analysis tool is a matrix with five columns to cover the category, pursued interests, power to influence, importance of the issue and a summary score of each significant stakeholder. Analysis should be used to reach an agreement on how best to involve people so that differentinterests can best be represented in the different phases of programming.

Workshop on “Formulation of Investment Projects in Agriculture and Rural Development” (FAO, 2009)

The document consists of a clear planning framework helping in the design of investment projects in developing countries, particularly focusing on investment project cycle.

Project Planning and Management - C134, Unit Three: Project Identification, Formulation, and Design (SOAS, 2013) *

Provides guidance regarding setting project objectives and reviewing alternative approaches to solve a given development problem. It emphasizes the involvement of stakeholders from the outset of project identification. 

*These documents are Unit chapters from a postgraduate distance learning module – P534 Project Planning and Management - produced by the Centre for Development, Environment and Policy of SOAS, University of London. The whole module, including study of the role of projects in development and financial and economic cost-benefit analysis, is available for study as an Individual Professional Award for professional update, or as an elective in postgraduate degree programmes in the fields of Agricultural Economics, Poverty Reduction and Sustainable Development, offered by the University of London. For more information see: http://www.soas.ac.uk/cedep/
These documents are made available under a Creative Commons ‘Attribution - Non Commercial – No Derivatives 4.0 International licence’ (CC BY-NC-ND 4.0).