Critical Thinking and Decision Making

Project Identification, Analysis, and Appraisal

• This course covers project identification, analysis, and appraisal.
• A project is a temporary undertaking with a defined beginning and end that creates a unique product, service, or result.
• Projects are temporary, meaning they have a start and an end date.
• Projects enable new value creation/advancements.
• A project delivers something distinct, whether a product, service, or result (e.g., developing a mobile application).
• Projects are planned, executed, and refined as more information becomes available (progressive elaboration).
• A project consists of structured tasks, activities, and deliverables for a desired outcome.
• Projects are the link between strategy and execution.
• Projects often involve multi-disciplinary tasks and collaboration across various fields or departments.
• Projects have limits regarding resources, such as time, budget, and manpower.
• Deliverables of a project can include products (buildings, machines, software), services (business functions), and results (R&D reports, recommendations).
• A project is closed when objectives are met or when terminated for reasons:
  • Objectives cannot be met.
  • The need for the project no longer exists.
  • The project runs out of budget.

Common Features of Projects

• Every project is initiated to achieve specific goals (e.g., launching a marketing campaign to increase brand awareness).
• Projects have internal or external stakeholders whose interests are considered.
• Projects follow distinct phases: initiation, planning, execution, monitoring and evaluation, and closure.

Project, Program, and Operations

• A project is a temporary endeavor with a specific objective, focusing on creating something unique.
• Projects have a short duration with a finite start and end.
• Projects have limited budgets and specific beneficiaries (e.g., a project on livelihood improvement in a given area).
• A program is a collection of related projects managed in a coordinated way to achieve broader goals.
• Programs are broader in scope and have strategic benefits.
• Programs have large budgets and are not specific to a group of beneficiaries.
• Programs have a longer-term duration spanning the lifecycle of its constituent projects.
• An example is urban redevelopment encompassing housing, road construction, and utility upgrades.
• Operations refer to ongoing and repetitive activities sustaining an organization's day-to-day functions (e.g., managing daily production in a factory, service giving at a government office)

Five Common Project Phases

• Identification (finding the project)
• Preparation/Analysis (does it have merit?)
• Appraisal (critical review, independent)
• Planning and scheduling (how to proceed for execution)
• Implementation (getting it started)
• Monitoring and Evaluation (success or failure)

Project Identification

• Project identification is a systematic process of identifying potential projects that align with organizational/societal needs.
• It involves identifying viable, impactful, and sustainable ideas.
• Identifying solutions for a particular problem based on various factors is project identification.
• It's the process of assessment and analysis of priority needs a project can address.
• This involves a "needs assessment" to identify community needs.
• Project identification starts with generating project ideas.
• Project ideas can originate from various situations (knowledge, experience, observable situations, etc).
• Projects may be designed to solve societal problems, meet a business need, utilize available resources, or meet market demand.
• Project identification includes approaches:
  • Resource-based identification
  • Market-based identification
  • Need-based identification.

Resource-Based Identification

• This approach identifies projects based on natural, human, or capital resources.
• The focus is on optimizing these resources to generate economic/social value.
• This approach emphasizes the efficient use of existing resources, turning them into opportunities for sustainable projects.

Market-Based Identification

• Projects are identified by analyzing market demand and supply gaps.
• It focuses on addressing unmet consumer needs and leveraging trends.
• It involves market research to identify trends and demand gaps, analyzing competitors, and aligning project goals with market opportunities.
• Examples include developing Ethiopia's coffee sector or establishing shopping malls.

Need-Based Identification

• This approach focuses on solving societal challenges or infrastructure deficits.
• It aligns with goals for social equity and sustainable development.
• This involves identifying pressing societal challenges, engaging stakeholders for input, and designing projects to effectively meet these needs.
• Examples include healthcare projects (rural health clinics) and infrastructure projects (road-building).

Tools for Conducting Needs Assessments

• a) Asking Questions/Interviewing & Listening
• Involve key informants (individuals who know community needs).
• Use open-ended questions; explore people's answers.
• Begin with HOW & WH-questions
• b) Focus Group Discussion (FGD)
• Participants similar in age, income, and education.
• Helps understand problems and needs.
• c) Open Forums
• Participants are self-selected, those aware of the meeting and chose to attend.
• d) Community Mapping
• Different groups (e.g., young vs. older women) work separately.

Agreeing on the Priority Needs

• Community members prioritize needs as they feel.
• It is important for them to see how their concerns have been included.
• Needs are grouped into general issues such as water, health, land, and food issues.

Capacity Assessment

• Conducted after needs assessment.
• Identifies community resources/strengths for addressing identified problems.
• Communities should use their own resources to address their issues.
• The project should strengthen the community's capabilities rather than doing things for the community.

Types of Assets in Capacity Assessment

• Human: skills, knowledge, ability to work, and good health.
• Social: based on relationships; includes organizations, political, and informal networks.
• Natural: local environment (land, trees, water, air, climate, and minerals).
• Physical: man-made (buildings, transport, water supply, sanitation, energy sources, telecommunications).
• Economic: things for livelihoods (money, savings, grain stores, livestock, tools, and equipment).

Concept Notes

• Outline the project idea (2–3 pages).
• It doesn't need detailed ideas, but donors gain an idea of the project and whether it's relevant and of high quality.
• Donors give feedback before a lot of time is spent on planning.

Background Information

• Detailed background information about the project's necessity.
• Identify beneficiaries and estimate needed resources.

Steps to Project Analysis

• Stakeholder analysis
• Problem analysis
• Objective analysis
• Strategy analysis

Project Appraisal

• Involves evaluating whether the project is valuable in terms of financial capacities and other aspects.

Project Selection

• Involves picking a project based on criteria.

Project Screening

• Project identification starts with problem/objective analysis and project idea generation.
• Project appraisal evaluates if the project is valuable in terms of financial capabilities or other aspects.
• Project selection involves choosing one or multiple projects based on criteria.

Project Analysis

• Project analysis is the process of analyzing a project from various perspectives to determine viability and sustainability.
• This includes technical analysis, operational analysis, market/demand analysis, financial analysis, environmental analysis, economic analysis, and risk analysis.

Stakeholder Analysis

• Stakeholders are those affected by or influencing the impact of an activity.
• Stakeholders can be individuals, groups, or organizations.
• Stakeholder analysis is important to identify those involved in and affected by a project.
• It determines stakeholder opinions and facilitates contributions.
• It involves identifying all stakeholder interests.
• The process involves four steps:
  • Identifying stakeholders.
  • Assessing stakeholder interests.
  • Assessing stakeholder influence.
  • Outlining a stakeholder participation strategy.

Problem Analysis; Problem Tree

• A problem analysis investigates the core problem, causes, and consequences.
• Problem analysis is an investigation into and analysis of core problems.
• It investigates the causes and effects related to a problem.
• A problem tree is a visual diagram illustrating cause-and-effect relationships.
• Steps to problem tree analysis include:
  • Agree on the main problem.
  • Identify causes via the question "But why?".
  • Identify effects via the question "So what?".
  • Organize causes and effects into a tree structure.
  • Establish a cause-effect hierarchical structure.

Objectives Analysis

• Objectives should relate directly to the problem analysis.
• It's a process for determining objectives to address issues.
• An objective/solution tree is a tool to identify necessary solutions and links between solutions.
• Levels in a solution/objective tree represent the means to achieving the next level.
• Turning negative conditions into positive conditions within a defined time.

Strategy Analysis in Project Management

• Understanding strategy and exploring how it's developed.

Why Project Managers Need to Understand Strategy

• Managers need to understand organizational strategy for effective decision-making and adjustment to current projects.
• Understanding strategy helps in aligning projects with the firm's mission.

Mistakes Caused by Not Understanding Strategy

• Focusing on problems with low strategic priority.
• Focusing only on immediate customers rather than the entire market place.
• Overemphasizing technology that doesn't support strategy/customer needs.

Stages in Project Management

• Problem/Project Identification
• Need Assessment
• Problem Tree Analysis
• Objectives Analysis
• Strategy Analysis
• Implementation

Defining Project Objectives; SMART

• The project objectives should be specific, measurable, achievable, relevant, and time-bound (SMART).
• Objectives must contribute to organization's strategic goals.

Resource Planning

• Assess/allocate necessary resources (financial, human, technical).
• Resource planning includes determining how to deploy existing resources or acquire new ones.

Developing Action Plans

• Project managers develop detailed action plans.
• Plans include timelines, milestones, and activities to achieve objectives.
• Roles and responsibilities of team members are part of the action plans.

Establishing Key Performance Indicators (KPIs)

• KPIs are used to monitor project progress and its alignment with strategic goals.
• KPIs should be linked to organizational strategy, focusing on outcomes like cost, time, quality, customer satisfaction, and ROI.

Feedback and Continuous Improvement

• Strategy analysis is an ongoing process.
• The process revisits strategy throughout the project's lifecycle.
• Regular feedback loops from stakeholders and periodic reviews ensure project alignment with evolving organizational goals.

Tools and Techniques to Aid in Project Strategy Analysis

• PESTLE analysis (Political, Economic, Social, Technological, Legal, Environmental)
• Porter's Five Forces
• Balanced Scorecard

Scenario Planning

• Considering different future scenarios & planning for them.
• Considering uncertainty and unpredictability within the project environment.

Cost-Benefit Analysis

• Assessing whether project expected benefits outweigh costs.
• Prioritizing projects with the best return on investment.

Strategy Selection

• Criteria to choose a strategy (e.g., fitness with urgency/priorities, cost/resource availability).
• Analyze the feasibility of each alternative.
• Choosing one of the alternatives as the activity strategy.
• Introducing additional criteria if agreement is not reached.

Criteria for Strategy Selection

• Fitness with urgency, priorities, and target issues.
• Cost and resource availability.
• Existing potential and capacities among target groups.
• Relevance for sector/objectives.
• Social acceptability.
• Benefits to primary stakeholders.
• Likelihood of achieving objectives.
• Risks.
• Sustainability.
• Environmental impact.

Strategic Management Overview

• Project alignment with strategy.
• Theme and focus for future direction
• Responses to external environment changes
• Allocation of resources to strengthen the organization's competitive position.
• Initiating links between mission, goals, objectives, strategy, and implementation.

Four Activities of Strategic Management Process

• Review and define organizational mission.
• Set long-term goals/objectives.
• Analyze and formulate strategies to reach objectives.
• Implement strategies through projects.

Economic Analysis; Little-Mirrlees Method

• Techniques for conducting economic analysis.
• Methods focus on maximizing national income through shadow pricing.
• Prices reflect true economic value (e.g., labor price adjusted for unemployment).
• Evaluations reflect foreign exchange.

Economic Analysis; UNIDO Approach

• Used in evaluating the costs and benefits of development projects.
• It aims to find whether a project is desirable for national economic well-being.
• It does not solely rely on market prices, as market prices may not reflect true economic values.
• The method incorporates social, environmental, and financial aspects.

Shadow Price

• The true economic value of a good/service based on societal costs.
• Reflects societal cost/value vs. market price.
• Used in cost/benefit analysis, particularly for public projects in distorted or absent market prices.

Tax and Subsidy Rate Adjustment

• Tax rate is the percentage collected by government.
• Taxes increase market prices.
• Subsidies decrease market prices.

Shadow Pricing Rate

• A conversion factor to adjust market prices to shadow prices.
• Adjusts for market distortions like taxes, subsidies, or externalities.

Shadow Exchange Rate (SER)

• Adjusting local values (originally converted using the official exchange rate (OER)) to their SER.
• Local value (SER adjusted) = (Local value (OER)) x (SER/OER).

Grant Proposal Writing

• Planning is crucial for writing a successful proposal.
• Communication and understanding the funder's priorities.
• Thorough research into the funder's mission, focus areas, and details of previously funded projects.
• Adopt the funder's terminology/themes (e.g., highlight sustainability).
• Tailor each proposal to match the funder's priorities.
• Highlight problem and solution and provide data/evidence.
• Use realistic solutions.
• Maintain detailed objectives, activities, timelines, and budgets.
• Quantify expected outcomes.
• Use relatable stories/testimonials.
• Keep the proposal simple and clear.
• Demonstrate organizational strength.
• Have a detailed budget.
• Have realistic and detailed budget.
• Include monitoring/evaluation plan
• engage stakeholders
• make a strong first impression
• follow funder’s guidelines
• anticipate questions
• follow up after submission and persistence with rejections.

Feasibility of Projects; Types

• Operational feasibility
• Technical feasibility
• Economic feasibility

Operational Feasibility

• A measure of how well a proposed system solves problems and the organization's willingness to support the system.
• It analyzes whether the system is functional during practical implementation, along with management commitment and employee base acceptance of the change.

Technical Feasibility

• Evaluates the technological aspects of project execution (e.g., design, construction, operation).
• Compares the technical requirements to the organization's technical capabilities.

Economic Feasibility

• Analysis that determines whether project benefits outweigh project costs.
• Decisions based on economic analysis will suggest the design and implementation of a project if benefits outweigh costs.

Environmental Impact Assessment (EIA)

• A systematic process to identify, predict, and evaluate environmental, social, and economic impacts of projects/policies/programs.
• A key step before implementation/approval.
• Ensures decision-makers consider environmental impacts alongside economic/social benefits.
• Helps ensure sustainable development.
• Essential for balance between rapid growth/infrastructure expansion with environmental preservation/social well-being.
• Integration of proper screening/scoping/baseline studies/impact prediction/mitigation planning/ and thorough EIS preparation.
• Includes:
  • Screening
  • Scoping
  • Baseline study
  • Impact prediction
  • Impact assessment/evaluation
  • Mitigation planning
  • EIS Preparation
  • Review and approval

Procedures, Scoping, and Data Collection in EIA

• Screening: Determining if an EIA is required and the level of assessment needed.
• Scoping: Defining key environmental issues, setting study boundaries, and establishing Terms of Reference (ToR) for the EIA.
• Baseline Study: Collecting data on current environmental and social conditions in the project area, including physical/biological environments, such as soil, water, and air quality; flora, fauna, and ecosystems; and socioeconomic aspects such as livelihoods, health.
• Impact Prediction: Forecasting potential environmental and social impacts of a project during construction, operation, and decommissioning.
• Impact Assessment/Evaluation: Determining the significance of predicted impacts based on magnitude, duration, and reversibility (and affected population).
• Mitigation Planning: Develop measures to avoid, minimize, or compensate for negative impacts.

EIA Steps: Producing the EIS & Review.

• Creating Environmental Impact Statement (EIS)
• Content of EIS: project description, baseline environmental conditions predicted impacts, measures for mitigation, monitoring and management plans.
• Ensuring the EIS meets quality standards, addressing relevant issues.
• Engaging local communities and experts during the Environmental Protection Authority’s (EPA) review of the EIS.

This quiz focuses on key aspects of critical thinking and its importance in decision-making and problem-solving. Participants will explore misconceptions about leadership and effective approaches to complex problems. Test your understanding of these essential concepts.