For a new project, identification of the project is the very first stage. This is the most crucial step as it forms the basis for further stages. This stage is concerned with collecting, compiling and analysing the economic data, eventually locating possible investing opportunities. The project idea should especially indicate the objectives, benefits, time span and the cost required for the completion of the project. This would hence give a broad viewpoint of the project to be taken into consideration. The project idea leads to generation of number of project profiles (alternatives) for which a decision is to be made. Here, comes the selection process i.e., choosing the best project profile. A project which will give maximum profits at minimum costs is considered to be the best choice. The following are the criteria for selecting a particular project.
• Investment size
• Location
• Technology
• Equipment
• Marketing
Now the question arises that why is it important to identify a project ? The following can be the important reasons for which a project is identified.
A proper identification of a project:
• acts as catalysts for economic development;
• initiates the process of development;
• beneficial considering the strategic (long-term) aspects;
• involve high financial investments;
• cannot be reversed;
• accelerates the pace of socio-cultural development;
A sound project idea should define the objectives very clearly, as lack of clarity at this stage would invite problems at a later stage. It should also define the boundaries (constraints) rather than going into action in the unknown.
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