Chapter Two

Project Design
 2

Chapter Overview
 Situation and Problem Analysis
 Identifying Stakeholder
 Mapping Stakeholders Needs and Interest
 Log frame Matrix
 Project Proposal

Abrha Megos (Ph.D)

The following sub-headings indicate the type of
questions to ask:
 Will the project maximize profits?
 Will the project maximize the utilization of the workforce?
 Will the project maintain market share, increase market
share or consolidate market position?
 Will the project enable the company to enter new markets?
 Will the project maximize the utilization of plant and
equipment?
 Will the project improve the company's image?
 Will the project satisfy the needs of the stakeholders and
political aspirations?
 Is the project's risk and uncertainty acceptable?
 Is the project's scope consistent with company expertise?
 4 December 14, 2022

Contents
 Project selection

 Steps in Project Identification and Selection

 Situation analysis
 Stakeholders analysis
 Problem tree analysis
 Objective analysis
 SWOT analysis
 Economic methods

 Alternative Project Selection

 The selection of the right project for future
investment is a crucial decision for the long-term
survival of your company.
 Selection of the wrong project may well swift
project failure leading to company
liquidation.
 Project selection is making a commitment for the
future.
 Project identification commonly follows the
following procedure ;

1. Generation of ideas

2. Monitoring the environment

3. Corporate appraisal (self assessment)

4. Preliminary screening

5. Project rating index.

 1. Generation of ideas
Most of the new projects ideas are a result of
 Once specialized technical knowledge or
 Marketing expertise or
 Some other competence

To stimulate the flow of project idea the following are

helpful
i. Analysis of Strength, Weaknesses, Opportunities
and Threats (SWOT):
 SWOT analysis represents a conscious and deliberate ,
and dynamic effort by an organization to identify
opportunities that can be exploited.
 Periodic SWOT analysis facilitates the generation of new
idea
ii. Clear articulation of objectives

➢ The operational objectives of the organization

may help to generate ideas
➢ The operational objective of business firm for
example,
Cost reduction
Productivity improvement
Increase in capacity
Expansion and growth

Can be helpful in generating the project idea

 2. Monitoring the environment
 The organization must systematically monitor
the environment in which it will operate
 In other words the organization is expected to
monitor the following key environmental
factors in relation to each of identified ideas.
Economic aspects
State of the economy
Possible fluctuation in the economy
The degree of integration with the
world economy
National policy
Sectoral policy
Government program
Tax policy
Government support
Financial policy
Technological factor
Availability of technology
Accessibility of the available technology
Socio demographic factor
Population size and distribution
Education level
The nature of competition (for business firms
Number of firms in the industry
Nature of entry
Nature of input supply
Availability
Cost of raw-material
 3. Self assessment and investigating the
project idea
a) Analyze the industry (sector) and analyzing the
organization in terms of,
Its capacity (I.e., whether the organization has the
capacity to put into practice the proposed idea).
Analyze the project in term of the benefit
(profit) that it will provide to the society ( firm)
b) Examine the input or resources requirement and
firms ability to make it available
c) Review its innovativeness
d) Study government plan, outlays, and guidelines
Reflection

What are the sources for project ideas?

How can potential projects be identified?
Is problem identification the same as
project identification?
Who identify projects?
Sources of project ideas:
➢ The community, researchers, experts, local
leaders, Policy makers, entrepreneurs, donors,
NGOs, Planners, etc.
➢ Government policy priorities, unusual events,
external threats, unsatisfied demands, under
utilized natural resources, etc.
Who identifies projects?
 Various organizations, whether local or foreign,
state owned or private, government ministries,
development banks, interest groups, CBOs,
NGOs and of course individuals can identify
projects.
Approaches to project identification

There are two major approaches to project

identification :
(a) Top-down approach
(b) Bottom-up approach
 Top-Down Approach
 Projects are identified based on demands from
beyond the community.

 This may include directives from:

 international conventions (such as Kyoto
Protocol/climate change)
 international institutions that have determined
particular priorities and thus projects
 national policy makers identifying projects that
pertain to party manifestos and/or national plans.
 In Bottom Up approach community/
beneficiaries are encouraged to identify and
plan the projects themselves with or without
outsiders.
Project Identification in Both approaches:
 Involves needs assessment
- collecting, processing and analyzing data on problems/needs
of communities.
 Review of secondary data
- Look at books, survey reports/ research papers,
publications, media reports, internet etc.
 Collecting and analyzing primary information
• Interviews
• Community mapping
• Focus Group Discussions
• Other methods
 03-04 December 14, 2022

1. Project Selection
Screening models help managers pick winners from a
pool of projects.
Screening models are numeric or nonnumeric and should
have:
Realism
Capability
Flexibility
Ease of use
Cost effectiveness
Comparability
 20 December 14, 2022

2. Steps in Project Identification and

Selection

a) Situation analysis
b) Stakeholders analysis
c) SWOT analysis
d) Problem analysis
e) Objective analysis
f) Alternative Tree Analysis or
project selection
 21 December 14, 2022

a) Situation Analysis
How to come up with a project before grasping
to project preparation?
 Usually there are two major levels where project
ideas are originate: the macro and micro level.
 1. Macro level, Project ideas emanate from,
among others:
 National, sector or regional plans,
 Unusual events such as droughts, floods, earthquakes, etc
 Multilateral or bilateral development agencies,
 Regional or international agreements in which a country
participates, etc
 22 December 14, 2022

 2. Micro level project ideas can emerge from;

 Existence of unused or under utilized natural and

human resources and the perception of opportunities
for their efficient use.
 Identification of unsatisfied demand or needs
 Need to remove shortage in essential materials,
services, or facilities that constrain the development
effort etc
 23 December 14, 2022

 This is about describing the problem or situation to

be addressed by the project.
 This can be ‘problem based’ or ‘opportunity
based’.
 e.g. what are the prevalent problem situations
or ‘opportunity based’, e.g. is there an
opportunity to serve people with disability? Or is
there an opportunity to establish a Cement
Factory (suitable soil)
 24 December 14, 2022

b. Stakeholder Analysis

 Stakeholder is any individual, group or

organization, community, with an interest in the
outcome of a program/project

Key Question
Whose problems or opportunities are we
analyzing? Who will benefit or loose-out, and
how, from a potential project intervention?
 25 December 14, 2022

Purpose: To identify:
Needs and interest of stakeholders
▪ Organizations and groups that should be
encouraged to participate in different stages
of the project
▪ Potential risks that could put at risk program
▪ Opportunities in implementing a program
 26 December 14, 2022

Stakeholder Analysis: the power/interest matrix

A B
Context setter
High Keep Key Players
satisfied

POWER

C The Crowd: D Subject: Keep

Minimal informed
Low effort

Low LEVEL OF INTEREST High

High power, highly interested people (Manage
Closely): you must fully engage these people, and make the
greatest efforts to satisfy them.

High power, less interested people (Keep Satisfied):

put enough work in with these people to keep them
satisfied, but not so much that they become bored with
your message.
Low power, highly interested people (Keep
Informed): adequately inform these people, and talk to
them to ensure that no major issues are arising. People in
this category can often be very helpful with the detail of
your project.
Low power, less interested people (Monitor): again,
monitor these people, but don’t bore them with excessive
communication.
 28 December 14, 2022

c. SWOT Analysis-Cont’d
SWOT analysis is a tool for institutional appraisal
and a brainstorming exercise in which the
representatives of the organization participate fully.

Strengths
Weaknesses
SWOT stands Opportunities
for:
Threats
 29 December 14, 2022

SWOT analysis of strengths, weaknesses,

opportunities, and threats.
 30 December 14, 2022

d. Problem Analysis
Problems Analysis visually represents the causes and effects
of existing problems in the project area, in the form of a
Problem Tree. It clarifies the relationships among the
identified problems.
Purpose:
- to identify major problems and their main
causal relationships.

Output:
- a graphical arrangement of problems
differentiated according to ‘causes’ and ‘effects’
 32 December 14, 2022

Relationships of Problems?

Simply connect causes and effects by directly

“Because”

EFFECT
I am not motivated to work

I am not sure what My salary is low I get poor

to do in this work respect from the
boss
I have lack of My My post My poor We
expertise/skills compan is not commu have
y is not high yet nication different
I have lack of getting to boss ways to
training profit think
CAUSE
Steps in Undertaking Problem Tree

1. Identify a “core” or central problem

2. List all the problems related to or stemming

from the core problem

3. Determine which related problems are causes

and which are effects of the core problem

4. Arrange the problems in a cause-effect

heirarchy around the core problem
34 December 14, 2022

EFFECT

CAUSE
Problem tree Analysis

Relies on:
 Group-based inter-action eg.Workshop format
 Participation of key stakeholders
 Process facilitation
 Achieving consensus on problems, causes and effects
Example 1: Subject of the workshop is food security, the
possible problems mentioned in relation to this subject are:

 Food production on hills decreasing  Dikes are degraded

 Ethnic clashes in neighboring  Soil fertility on hill slopes is
districts decreasing
 Food shortages  Soil erosion on hill slopes
 High incidence of malnutrition  Irregular supply of inputs for
 Canals are blocked rice production
 Rice production in low lands  High immigration rates
decreasing  Irrigation water does not
 Poor maintenance of irrigation reach fields in desired
facilities quantity
 High incidence of
Problem Tree malnutrition

Food shortages

Rice production Food production

in low lands High immigration
on hills decreasing rates
decreasing

Irrigation water does Irregular supply of Soil fertility Ethnic clashes in

not reach field in inputs for rice on hill slopes neighboring
Effect
desired quantity production is decreasing districts

Canals are Dikes are Soil erosion on

blocked degraded hill slopes

Cause

Poor maintenance
system for irrigation
facilities
38 December 14, 2022
 39 December 14, 2022

e. Objective Analysis

 This involves turning a problem tree into an

objectives tree.
 Objective Analysis clarifies the means-ends relationship
between the desirable situation that would be attained
and the solution for attaining it. This stage also requires
an Objective Tree.
 The ‘negative situations’ of the problem tree are
converted into solutions, expressed as ‘positive
situations’.
Analysis of Objectives

 Transforming the problem tree into an objectives tree

by restating the problems as objectives.
 Problem statement converted in to positive statements
 Check the means-ends relationships to ensure validity
and completeness of the hierarchy (cause-effect
relationships are turned into means-ends linkages)
 41 December 14, 2022

Objective Analysis-Cont’d
How to Make the Objective Tree
Step 1: Reformulate all negative situation of the problem tree into
positive situations that are :
• Desirable
• Realistically achievable

Step 2: Make sure that there is a means – ends (results) relationship (if
this is implemented then this will be achieved)
The causes become the starting point for the objectives.
The effects become the results of the objectives.

Step 3: IF necessary:
• Revise statements
• Add new objectives if these seem to be relevant and necessary
to achieve the objective at the next higher level
• Delete objectives which do not see suitable or necessary
 42 December 14, 2022

Reformulating of Problems?

Results
I enjoy
I am
working
not motivated
and am so
to
motivated
work
Knowsure
Not what what
to Salary
Salaryisisincreased
low Poor respect
Respected and
do wellin this
to do encouraged by
from the boss
work boss

Lack of
Adequate My
My Not high
Get Better
Poor Understan
Different
skills/expertise
expertise/skills company
compan promote
post yet communi
commu ding of
ways to
is cation to his/her
y getting
is not d nication think
profits boss perspectiv
getting to boss
Lacktrained
Get of e
profit
training
Means
 Incidence of
Malnutrition reduced
Diagram of objectives
Improved Food
situation

Rice production Food production

in low lands Lower
on hills increased immigration
increased
rates

Sufficient irrigation Regular supply of Soil fertility on Less ethnic

water reaches the inputs for rice hill slopes clashes in End
fields production increased neighboring
districts

Canals Dikes are Soil erosion on hill

cleared upgraded slopes reduced

Means

Maintenance
irrigation facilities
improved
e) Alternative Tree Analysis

 is a technique for identifying alternative solutions or

course of action that can be used to achieve the same
or alternative objectives and the display of this
information in a simple format.

 is a process in which specific project strategies are

selected from among the objectives and means raised
in Objectives Analysis, based upon selection criteria.
Criteria for selecting the alternative:
 RELEVANCE: the strategy corresponds to the needs
of the stakeholders.
 EFFECTIVENESS: the lower level objectives of the
strategy will contribute to achievement of the project
purpose.
 EFFICIENCY: cost-effectiveness of the strategy in
transforming the means into results.
 CONSISTENT with development policies
 SUSTAINABILITY of the project
 ASSUMPTIONS and RISKS
 Incidence of
Diagram of Alternatives Malnutrition reduced

Improved Food
situation

Rice production Food production

in low lands Lower
on hills increased immigration
increased
rates

Soil fertility on
Sufficient irrigation Regular supply of hill slopes
water reaches the inputs for rice increased
fields production
Less ethnic
clashes in
neighboring
districts
Canals Dikes are
cleared upgraded Soil erosion on hill
slopes reduced

Maintenance
irrigation facilities
improved
Alternatives for decision:

 Let us assume that agricultural inputs are

provided by one NGO, soil conservation
activities are already in place by agriculture
office, and conflict is on the process to be
resolved by one INGO. Therefore, the
project will focus on the irrigation
system alternative
Problem Tree
Objective tree
Alternative tree
 51 December 14, 2022

Project Selection _Cont’d

Example of the Problem Tree ( case of bus traffic accidents) to
the Objective Tree
Incidence of bus accidents is high

Drivers do not Many technical Road

follow rules problems of buses condition is
too bad

Drivers are not Many old Bus is maintained poorly

trained buses

Regular Mechanic Insufficien

New buses tech. is s tech. is t
has not not done inadequat equipme
been e nt at
purchased workshop
 52 December 14, 2022

Example of the Problem Tree ( case of bus traffic accidents)

to the Objective Tree
Incidence of bus accidents
is loweredof bus accidents is high
Incidence

Driver follows
Drivers do not Fewer technical
Many technical Better road
Road
follow rules
rules problems of buses
troubles condition is
infrastructure
too bad

Bus drivers
Drivers are not Fewer old
Many old Bus is maintained poorly
trained buses adequately

Regular Mechanic Sufficient

Insufficien
New buses tech. is s tech. is t
equipme
purchased
has not not done
check inadequat
improved equipme
nt
been done e nt at
provided
purchased workshop
 53 December 14, 2022

Example of the Objective Tree ( case of bus traffic accidents)

How could we divide?

Incidence of bus accidents is lowered Road

Improvement
Approach
Driver follows Fewer technical Better road
rules troubles infrastructure

Bus drivers Fewer old Bus is maintained

trained buses adequately

Regular Mechanic Sufficient

Driver Training New buses tech. s tech. is equipme
Approach purchased check improved nt
done provided
Bus Maintenance
Approach
Group Exercise 1

 Core problems:
a. Low Effectiveness of Training
b. Poor Urban Housing Service
c. Poor Rural Education
d. Lack of Sufficient Clean Water in Rural Areas
e. Frequent Bus Accident in Urban Areas
f. Inefficient Rural/Urban Land Use System
Instruction:
 Prepare problem and objective trees
 Select one alternative solution