The document discusses different models of project cycles including the Baum cycle, DEPSA cycle, and UNIDO cycle. The Baum cycle originally had 4 stages (identification, preparation, appraisal/selection, implementation) but later added an evaluation stage. It describes each stage in detail. The DEPSA cycle has 3 phases (pre-investment, investment, operation) divided into 6 stages. The UNIDO cycle also has 3 phases - pre-investment, investment, operational. The pre-investment phase includes opportunity studies, pre-feasibility studies, functional studies, and feasibility studies. It provides details on the objectives and components of each.

1. UNIT - II
PROJECT CYCLE
2.1. Meaning and Definition of Project Cycle
2.2. World Bank Project Cycle
2.3. UNIDO Project Cycle

2. What is project cycle

3. Project Cycle

5. Meaning of Project Cycle
 Before any project is actually realized it goes
through various planning phases.
 Therefore, the different phases through which
a project passes constitutes what is often
called “the project cycle”.
 The main features of this process are
information gathering, analysis and decision-
making

6. Meaning of Project Cycle (cont…)
 project cycle the primary preoccupation of the
analyst is to consider alternatives, evaluate
them, and to make decisions as to which of
them should be advanced to the next stage.
 The project cycle means the various stages of
information gathering and decision-making,
which take place between a project’s
inception and completion.

7. Type of Project Models
There are various models that deal with the
project cycle. However, here we give more
emphasis on the Basic Models
 The Baum’s cycle
 DEPSA’s
 UNIDO project cycle.

8. Various stages of Baum Cycle
• The first basic model of a project cycle is that
of Baum (1970), which has been adopted by
the World Bank and initially recognized four
main stages, namely.
• Identification
• Preparation
• Appraisal and Selection
• Implementation

9. Phases and stages of Baum Cycle
It has distinct phases and stages :
Meaning of Project Identification
• Fixing Priority is called Product identification
( giving more priority for the specific aspects )
• It deals with elimination process

10. Phases and stages of Baum Cycle
At a later stage (in 1978) the author has
added an additional stage called “Evaluation”
which usually closes the cycle as it gives rise to
the identification of new projects.
Thus making the stages 5 in number.

11. Baum Cycle – Stage 1
Project Identification
Meaning : Project identification is nothing but “ to
find potential projects “
Stages of Project Identification
(A). Conceptual Stage – Generation of Project Ideas
(B). Screening Stage – unviable ideas are eliminated
(C). Identification Stage - Viable Projects will be selected
(D). Pre feasibility Stage – Pre feasibility studies should
be taken place

12. Baum Cycle – Stage 2
Project Preparation
Project preparation (project formulation) covers
the establishment of technical, economic and
financial feasibility. 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.

13. Project formulation
 The purpose of project formulation is to make investment
decisions.
 It enables the decision makers to decide whether we go
ahead with that or not.
 It involves the identification of investment options by the
enterprise.
 The purpose is to bring project sponsoring authorities
support.
 It requires forecasting , choosing of goals , details , feasibility
studies , Arranging funds, distribution of work as well as funds
, execution and evaluation of funds.

14. Baum Cycle – Stage 3
Project Analysis
After a project has been prepared, it is generally
appropriate for a critical review or an
independent appraisal to be conducted.
This provides an opportunity to re-examine
every aspect of the project plan to assess
whether the proposal is appropriate and sound
before large sums are committed.

15. Project Analysis
Appraisals should cover at least seven aspects of
a project, each of which must have been given
special consideration during the project
preparation phase, that are :
Technical , Financial , Commercial , incentive
( things are going in such a way or not ? , who's
participation is required ) , Economic ,
Managerial and Organisational.

16. Baum Cycle – Stage 4
Project Implementation
The objective of any effort in project planning and analysis
clearly is to have a project that can be implemented to the
benefit of the society.
Thus, implementation is perhaps the most important part of
the project cycle.This stage includes :
 whether funds are actually disbursed to get the project
started and keep running.
 Whether the project is carried out in the way and within
the period that was planned.
 Problems frequently occur when the economic and
financial environment at implementation differs from the
situation expected during appraisal.

17. Baum Cycle – Stage 5
Project Evaluation
 Meaning of Project Evaluation is to look back
over what took place, to compare actual progress with
the plans, and to judge whether the decisions and
actions taken were responsible and useful.
 It is a most important managerial tool in ongoing
projects and may take place at several times in
the life of a project.

18. DEPSA’s Project Cycle – Three Phases
• There are various ways in which the project cycle
may be viewed and portrayed depending on the
purpose, emphasis and detail required to
illustrate.
• According to the Guidelines to project planning in
Ethiopia (1990) of Development Project Studies
Authority (DEPSA), the project cycle comprises
three major phases.
• Pre – investment
• Investment and
• Operation

19. DEPSA’s Project Cycle – six stages
• Each of these three phases may be divided into
stages. The Guidelines has divided the Project
cycle into six stages :
• Identification
• Preparation
• Appraisal/decision
• Implementation
• Operation
• Ex-post evaluation

20. UNIDO – Project Cycle
It is comprising three distinct phases :
• The pre – investment
• The investment and
• The operational phases
Each of these three phases is divided into stages,
some of which constitute important consultancy,
engineering and industrial activities.

21. According to the UNIDO Manual, the pre – investment
phase comprises several stages:
• Identification of investment opportunities (opportunity
studies).
• Analysis of project alternatives and preliminary project
selection as well as project preparation (pre – feasibility, and
feasibility studies) and
• Project appraisal and investment decision (appraisal repot)

22. Functional Studies
Functional studies are also a part of the project
preparation stage and are usually conducted
separately, for later incorporation in a
pre – feasibility study or feasibility study as
appropriate.

23. UNIDO Project Cycle : Phase 1 - Pre –
investment phase
It is a central point of attention, because the
success or failure of an industrial project
ultimately depends on the marketing, technical,
financial and economic findings and their
interpretation, especially in the feasibility study.

24. (A). Opportunity study
Opportunity Studies : The identification of
investment opportunities is the starting – point
in a series of investment – related activities,
when potential investors (private or public) are
interested in obtaining information on newly
identified viable investment opportunities.

25. (A).Opportunity stydy ( contiu..)
The main instrument used to quantify the
parameters, information and data required to
develop a project idea into a proposal is the
opportunity study, which should analyses :
• Natural resources
• The existing agriculture (basis for agro industry)
• Future demand for consumer goods.
• Imports substitution and export possibilities
• Environmental impact
• Expansions of existing capacity
• Manufacturing sectors (successful in other countries)
• Diversification

26. (A). Opportunity study ( Contin…..)
• General opportunity studies ( Sector approach )
designed to identify opportunities based on the
utilization of natural, agricultural or industrial.
• Specific project opportunity studies (enterprise
approach)
It may be defined as the transformation of a
project idea into a broad investment proposition.

27. (B). Pre – Feasibility studies
A pre – feasibility study should be viewed as an
intermediate stage between a project
opportunity study and a detailed feasibility
study

28. Formulation of Project idea in Pre Feasibility
Study
Before assigning larger funds for such a study, a
further assessment of the project idea might be
made in a pre-feasibility study. This is to see if:
• All possible project alternatives are examined
• The project concept justifies detailed study
• All aspects are critical and need in – depth
investigation
• The project idea is viable and attractive or not

29. (C). Support or Functional Studies
It cover aspects of an investment project, and are required as
prerequisites for, or in support of, pre – feasibility and
feasibility studies, particularly large – scale investment
proposals.
• This includes:
• Market studies of products
• Raw material and factory supply studies
• Laboratory and pilot plant tests
• Location studies
• Environmental impact assessment
• Economics of scale studies
• Equipment selection studies

30. (D). Feasibility Studies
 It should provide all necessary data required for decision
making
 The commercial, technical, financial, economic and
environment prerequisites for an investment project should
be defined and critically examined on the basis of alternative
solutions already reviewed in the pre – feasibility study.
 It should clearly examine the results of the effort on the
basis of possible marketing strategies , possible market share
 Corresponding Production Capacities , Plant Location ,
Existing Raw Material , Appropriate technology and
Mechanical Equipment's should also be determined
Environment Impact Assessment
 Final part of the feasibility study includes : Scope of
Investment , New working Capital , Production and Marketing
Cost , Sales revenue , Return on Capital.

31. (E). Appraisal Report
After Feasibility studies, the various parties will
carry out their own appraisal of the investment
project in accordance with their individual
objectives and evaluation of expected risks, costs
and gain.
The techniques applied to appraise projects in
line with these criteria center around technical,
commercial, market, managerial, organizational,
financial and possibly also economic aspects.

32. UNIDO : Phase 2 – Investment / implementation
Phase
The investment phase can be divided into the following
stages:
• Establishing the legal, financial and organizational,
including proposing, evaluation of bids and negotiations.
• Technology acquisition and transfer.
• Detailed engineering design and contract, including
tendering, evaluation of bids and negotiations.
• Acquisition of land, construction work and installation.
• Pre – production marketing, including the securing of
suppliers and setting up the administration of the firm.
• Recruitment and training of personnel.
• Plant commissioning and start – up.

33. UNIDO : Phase 3 – Operational Phase
It is connected with Problem identification
Short term problems :
• Production techniques
• Operation of equipment
• Inadequate labor productivity
• Lack of qualified staff and labor.
Long term problems :
• Production and marketing costs
• Sales revenues.

34. Steps or phases of Project Life cycles
1. Pre investment phase
Investment opportunities , Investment Analysis,
Feasibility study , decision making
2. Implementation Phase
Project design , Drawings and Blue Prints , Step by step
approach
3. Operation Phase
 It begins , commissioned and ends with Projects , Long
time consumption will be there
 It ensures smooth and un interrupted operation
 Project monitoring and Evaluation

35. Steps or phases of Project Life cycles
1.Concept phase – Introduction stage
2. Definition phase – Introduction stage
3. Planning and organising phase – Growth
4. Implementation phase – Maturity
5.Clean up phase – Declain
It helps a project manager to ascertain the
health of any project at any point of time.

36. THANK YOU
END OF UNIT - II