A project is a sequence of activities that has a definite start and finish, an identifiable goal and an integrated system of complex but interdependent relationships. Project Life Cycle consists of sequential phases through which projects undergo.
Phases of a Project Life Cycle
The phases are important in planning a project since they provide a framework for budgeting, manpower, resource allocation, scheduling project milestones, project reviews etc. All projects go through the following stages whether big or small.
1. Project Idea /Conception
An idea regarding intervention in a specific area to address and identify a problem is developed or formed. Sources of ideas include
- Market demand where one may be facing increasing demand thus becoming a problem
- Technological changes- this forces an organization to change in order to make use of the new technology
- Natural calamities like fire, floods, landslides, drought etc.
- Resource availability- makes use of the available resources
- Political considerations
- Need to avail basic requirements or necessities to a community
2. Project Identification
After conception of ideas, potential projects arising from the ideas crystallized above are identified. The information may be captured in the form of a proposal or proposals and submitted to an agent or agency for consideration and objective judgement to assess the potential and justification for the intervention before the idea goes to the next stage in the cycle.
3. Project Preparation
Involves a more thorough and detailed collection of data and information on the proposed project. This is normally done by people with technical and analytical skills in consultation with the target beneficially. The objective of the project is defined and alternative solutions described. Its usually conducted by people with technical and analytical skills in order to determine whether the project can be achieved and to establish whether the project is feasible. Feasibility involves viability of the project i.e. costs of the project and benefits of the project.
The feasibility studies include:
- Financial feasibility
- Economic feasibility
- Technical feasibility
- Environment feasibility
- Market feasibility
- Legal feasibility & Social feasibility
4. Project Appraisal
This involves further comprehensive and systematic analysis of the proposed projects by an independent team of experts in consultation with the stakeholders of the project, so as to assess whether the proposal is justified before large amounts of money are committed. The effects of the project on the organization and society are investigated and documented. On the basis of appraisal a decision is made on whether to go ahead with the project or not where a critical a view is done by a team of independent experts who are not involved in feasibility studies done earlier. This provides an opportunity to reexamine every aspect of the project before funds raised are committed.
5. Project Selection
From appraisal, several projects may be found to be beneficial. However not all viable projects can be implemented. We therefore need to choose one or a few based on available resources and the priorities of the shareholders. Where all projects are viable we may also need to prioritize them in order of possible implementation. This is due to scarcity of resources for project implementation
6. Negotiation and Financing
Once the project to be implemented is selected and agreed upon, the next step is to negotiate for funding and other related aspects e.g. conditions for grants, repayment period, interest rates, graze period, flow of funds, contributions from stakeholders etc. This culminates into a binding document for all concerned.
- Introduction to Project Finance
- Characteristics of Project Financing
- Procedural Aspects of Project Finance
- Typical Project Financing Models
- Term Loans as a Project Financing Method
7. Planning for Implementation
This is done before final implementation of project. This stage involves all stakeholders including implementers, beneficiaries, funding agency. It enables the Project Manager to address issues like the project objectives, scope of the project, financial arrangements, implementation schedules, project environment, likelihood of changes to design, monitoring and evaluation plans etc. It enables definition of objectives, outputs, inputs, activities that will go into the project, the indicators, means of verification and assumptions of the project. The most important outcomes of such planning include time schedules. Budget committed for various activities and quality plans. It is also important to come up with project log frames (logical formula) i.e. PPM (project planning matrix) especially for developmental project.
8. Project Implementation
It is the most crucial stage for most projects since project activities are carried out at this stage. Many projects that fail normally do so at this stage. Monitoring of progress and reporting are crucial. Implementation is considered to be a ‘mini-cycle’ within the project life cycle. It has three phases: Investment, development, and the full development phase.
- Investment period: It can take 1-3 years depending on the project. The major investment like buying of capital items, warehouses etc of the project undertaken.
- Development period: This occurs when production builds up and the actual activities are being done.
- Full development period: This is reached when production picks up and continues until the project ends.
9. Monitoring and Reporting
This is an on-going activity during implementation. Monitoring is the collection of data on project implementation. The aim is to ensure that the activities go on according to plan. Any problems can be easily detected and corrective action taken. It can be done by beneficiaries, implementing staff, supervisory staff and Project Management team. Communication channels should be clear and easy to allow transparency and accountability of those involved.
It involves a systematic review or examination of the element of success and failure in projects. The information collected from monitoring is the main input into evaluation.
Is conducted at three stages:
- Ex-Ante evaluation-done before implementation is done e.g. skills, resources required
- Concurrent/ongoing Evaluation-done during process of implementation
- Ex-Post Evaluation-done at the end of the implementation i.e. What has been achieved? What is not achieved? Why we didn’t achieve? etc.