After completion of any further detailed investigations of the project area or subsector which may have been recommended by the project formulation team at the end of Phase 2 - Farm Sample Surveys (Tool No. 12) and Commodity Chain Analysis (Tool No. 13) can be of help in this respect - Phase 3 begins by defining in greater detail the project's specific objectives. It is essential to do this at this point in order that project design criteria can be drawn up to guide the formulation team. An approach which can help with this task in a systematic and coherent manner is Logical Framework Analysis (Tool No. 14).
Once they have been given the key design criteria that are linked to the main project objectives, the team members will proceed, individually or in functional working groups, to the detailed planning of individual project components, which will tend to fall into three main categories: production, production support and social support components. Farm Production Planning (Tool No. 15), including Budgeting Techniques and Linear Programming, can be of help in identifying viable and sustainable cropping patterns and production interventions at the farm level. Projecting Herd Growth (Tool No. 16) can help in the design of projects with major livestock activities.
Attention is then given to how these different components are to be scheduled over time. An organizational structure for the project and arrangements for managing it also need to be decided and the management technique Organizational Responsibility Charting (Tool No. 17) can be of help in this. Phase 3 is completed by bringing together the estimates of component costs and consolidating them into a schedule of overall project costs. A technical note on Project Cost Estimation and Financing (Tool No. 18) provides relevant guidance.