The document outlines the project cycle, which encompasses all stages from project identification to evaluation, with a focus on various project cycle models. It details the five phases of the project life cycle as identification, preparation, appraisal, implementation, and evaluation, along with methodologies for each. Different organizations, such as the World Bank and UNIDO, have distinct frameworks for managing project cycles, emphasizing the importance of thorough feasibility studies and ongoing evaluation.

1. Chapter –II
Project Cycle
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2. Project Cycle
 Meaning and Definition of Project Cycle
 World Bank Project Cycle
 United Nations Industrial Development
Organization (UNIDO) Project Cycle
 Development Project Studies Authority (DEPSA) Life cycle
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3. Project life Cycle
 Project life cycle encompass the whole process of project
analysis..
 The project life cycle is the stages of activities, through
which projects run, and which constitute a definite
sequence.
 They are closely linked to each other and follow a logical
procession.
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4. Con’t
 The Project Life Cycle refers to a logical sequence of
activities to accomplish the project’s goals or objectives.
 Regardless of scope or complexity, any project goes
through a series of stages during its life.
 The project cycle can be explained in terms of five
phases: identification, preparation, appraisal,
implementation, and evaluation.
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5. Project cycle models:
Many project cycle models differ in their perspective emphasis
and level of detail.
The three common models are:
1. The Baum (world Bank) project cycle model
2. United Nation Industrial Development Organization
(UNIDO project life cycle
3. Development Project Studies Authority (DEPSA) Life cycle
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6. 1. The Baum (world Bank) project cycle model
 The world bank suggested the stages in the
project activities (Baum, 1982) as follows:
1. Project identification
2. Project preparation
3. Project appraisal
4. Project implementation
5. Project evaluation
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7. 2. The UNIDO project life cycle model
The following phases are the project life cycles according to
UNIDO: United Nation Industrial Organization
1. Pre-investment phase
I) Opportunity studies (project identification)
II) pre-selection(pre-feasibility study)
III) preparation (feasibility)
Iv) Appraisal
2. Investment Phase
3. Evaluation and Operating phase
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8. 3. Development Project Studies Authority (DEPSA) Life Cycle
The project cycle comprises three major phases:
1. Pre – investment
2. Investment
3. Operation
 According to the Guidelines to project planning in Ethiopia
(1990), the project model more used in Ethiopia is related to
Development Project Studies Authority (DEPSA) Life cycle
model.
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9. Project Cycle
 World bank project life cycle model:
1. Project Identification
2. Project Preparation
3. Project Appraisal
4. Project Implementation
5. Project Monitoring and Evaluation
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10. 1. Project identification
• The first stage in the cycle is to find potential
projects.
• Some of the sources of projects are:
i. Resource based
ii. Market based
iii. Need-based
iv. Well – informed technical specialists and local
leaders are also common sources of projects
 Ideas for new projects also may come from proposals
to extend existing programs.
 In general, most projects start as an elementary
idea.
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11. Con’t
 Identification is the first step in the project cycle
 Opportunity sensing is essential for new as well as existing
entrepreneurs; once existing entrepreneurs reach the comfort
stage in their project, new business opportunities need to be
identified for enterprise sustenance, growth and development.
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12. Con’t
 Project identification is the idea stage and it involves activities concerned
with surveying, reviewing and inventorizing existing data and information.
These include:
 Natural resource data
 Human resource data
 Socio-economic data
 Resource availability
 Market gap
 Need gap
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13. Con’t
 Having achieved a good database, the process of identification
of gaps would have been laid. Thus, such gaps, which lead to
project ideas, could be generated
 Once a project is identified, the next step is to carry out a
project preparation document, which is also called feasibility
study
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14. 2. Project preparation
 Also called project feasibility Study
 The feasibility study generally gives full details of a project
proposal.
 The proposal is as well known as project identification brief,
which contains the objective(s) of the project, identification of
the constraints and means of overcoming the constraints
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15. Con’t
 At this stage the project is being seriously considered as a
definite investment action.
 Project preparation (project formulation) covers the
establishment of:
 technical,
economic and
 financial feasibility.
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16. Con’t
 Decisions have to be made on:
 the scope of the project,
 location and site,
 soil and hydrological requirements,
 project size (farm or factory size) etc
 Complete technical specifications of distinct proposals accompanied by full
details of financial and economic costs and benefits are the outcome of the
project preparation stage.
 The project now exists as a set of tangible proposals.
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17. Con’t
 The feasibility study gives direction in which all technical,
institutional, economic and financial conditions necessary to achieve
the objectives of the project are highlighted.
 At the conclusion of the feasibility study, a project report would be
prepared
 The report will serve as a work plan or a guideline to implement
the project, provide the basis for appraisal/review and a baseline data
for subsequent monitoring and impact evaluation
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18. 3. Project Appraisal
 Appraisal involves carefully reviewing all aspects of the
project regarding to the project objectives. The proposal is
subjected to sensitivity analysis at this stage.
 Some explicit appraisal is a necessary part of the decision-
making process before funds are committed.
 It may be advisable to let a separate group of people to conduct
project appraisal
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19. Con’t
Project appraisal encompasses:
 Detailed review of the feasibility
 Relevance of the project objectives
 Technical Appraisal
 Financial Appraisal
 Economic Feasibility (Appraisal)
 Social Appraisal
 Environmental Appraisal
 Institutional Appraisal
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20. Appraisal methodology
 Technical appraisal
 Location
Choice of technology
Scale/layout
Equipment
 Financial appraisal
Investment/cash flow
Risk
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21. Con’t
 Economic appraisal
Net benefits efficient use of resources
Market prices used
Issues of opportunity cost
Issues of cost-benefit
 Institutional appraisal
Project organization/structure
Human resources requirements/skills
Information/communication system
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22. 4. Project Implementation
 Implementation or project execution refers to the
development/construction activities up to the point at which the
project becomes fully operational.
 If there has been good preparation and programming, then efficient
and timely implementation depends on good management
supervision, technical staff and timely release of funds
 Actual execution
 Project appraisal report
 Project management process
 Procurement
 Risk management
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23. 5. Project Monitoring and Evaluation
 The final phase of the project cycle is the Project Evaluation.
 While projects may be subject to on-going monitoring/evaluation,
there is need for a more comprehensive evaluation.
 The essence of evaluation is that it often provides an opportunity to
learn from experience. Such lessons are built into the design and
preparation of future projects.
 Project evaluation is a systematic and objective assessment of an
ongoing or completed project.
 Project Evaluation is a step-by-step process of collecting, recording
and organizing information about project results, including short-
term outputs (immediate results of activities, or project deliverables),
and immediate and longer-term project outcomes (changes in
behavior, practice or policy resulting from the project).
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24. End
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