Project identification is the first step of any project cycle. Entrepreneurs need to identify and zero in on a project that suits their requirements and can help them attain their goals before spending significant time and resources on a project. They also need to study in detail the feasibility of the proposed project well before they start planning the other steps of the project cycle. Usually various aspects are required to be studied before picking a project.
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’ requirement.
Opportunities in the Environment for Project Identification
Meaningful indication for a successful project can be availed from the following one or more sources for project identification
(a) Five Year Plans
For project identification, the Five Year Plans are indicative enough to reflect the government’s intention, including the policy emphasis on the sectors and—within the sector—particular type of industries.
(b) Imports and Exports
The industry-wise, and also product-wise, detailed statistics of imports and exports are regularly published by the government. These information indicates the possible venture area—What are the products, and the volume of such products as exported to which countries? And similar information of imports as well.
We can get enough idea from these statistics about the possible export industry or project to produce goods for import substitution.
(c) Financial Corporation and Industrial Development Corporation at State level sponsor project feasibility reports with the help of reliable and established consultants for promotion of industries in the State. Such reports can be a very helpful guide to generate ideas for the start of a project.
(d) Departments of SSI and ARI, as mentioned earlier, prepared about 200 project profiles to help and guide small industries for investment up to Rs. 5 crores in a project. These projects are industry-group-wise, and even provide source information of the required plant and machineries with costs updated in 1994.
(e) Council of Scientific and Industrial Research (CSIR)
With their network of laboratories has developed new processes and technologies along with their commercial applications. These know-how are available at less cost and without any foreign exchange involved and can be useful in considering a suitable project.
The selection of the process/product know-how can be made in conjunction with information available from other sources. For example, the CSIR, Jorhat, has the technical know-how for the manufacture of ‘micro-crystalline wax’.
It also appears from the import statistics that this product is regularly imported by many organizations. Such information and the available know-how can give ideas of developing a project for the manufacture of this product provided the availability of the basic raw material—i.e. ‘crude oil-tank-bottom- scrappings’—is ensured.
(f) Analysis of industrial information such as capacity installed, actual productions, market sizes with its growth can be a source of information to indicate opportunities.
(g) Trade Fairs and Industrial Exhibitions including both national and international exhibits, many new products and processes can be a source of information and ideas for a project.
(h) Economic and social trend and the various statistics available in this regard can be analysed to find some opportunities. The band of affluent middle class population with the changes in their pattern of living will indicates the growth of demand for specific range of consumer durables including domestic appliances—big and small.
(i) BIFR can provide a list of endless sick units which are chained by enormous accumulated loss. With careful analysis, a large number of such units may be profitably revived by skilled management and infusion of necessary fund. We have noted earlier that in such cases financial helps can be availed from IIBI and banks as well.