IGNACIO, Edchelle B.

PASCUAL, Cristina M.

WRITTEN REPORT
CHAPTER 21: ASPECTS OF PROJECT
DEVELOPMENT CYCLE

PROJECT DEVELOPMENT CYCLE

Projects are undertaken for the purpose of developing systems, either to create new
ones or improve existing ones. The natural life of systems gives rise to a similar life
cycle in projects called project life cycle.

3 PROJECT DEVELOPMENT CYCLE

1. Pre – Investment
2. Investment Phase
3. Operational Phase

 PRE- INVESTMENT
The adequacy of the pre-investment and analysis largely determine the
success or failure of an industrial. If the pre- investment study is ill-based, the
techno-economic rectification or correction of the project will be difficult.

STAGES OF PRE- INVESTMENT PHASE

1. Identification of Investment Opportunities (Opportunity Studies) -
Identification of investment opportunities should be made at the beginning
of investment-related activities. Information on the newly identified and
viable investment opportunities should be obtained.

Characteristics: Sketchy, based more on rough aggregate estimates

than on detailed analysis.
Objectives: Refinement of business idea, preliminary evaluation of
alternative approaches, preliminary assessment of strengths and
weaknesses of concepts.

2. Preliminary Project Selection (Pre-Feasibility Studies) - A pre-

feasibility study should be viewed as an intermediate stage between a
project opportunity study and a detailed feasibility study (FS); the
difference being in the degree of detail of the information obtained and the
intensity with which project alternatives are discussed.

Characteristics: Intermediate level of detail based primarily on

secondary data.
Objectives: Preliminary project assessment, identify project
alternatives, identify critical aspect that requires special support studies.
 3. Project Formulation (Feasibility Studies) - A feasibility study should
provide all data necessary for an investment decision. The commercial,
technical, financial, economic and environmental prerequisites for an
investment project should therefore be defined and critically examined
based on pre-feasibility study.

Characteristics: Clear project concepts and criteria, comprehensive

project design, reliable information often primary data, quantified
prediction or performance, detailed analysis with high confidence level,
consistent and defensible conclusion
Objectives: Provide commercial, technical financial ad economic
information needed of investment decision-making.

4. The Final Evaluation and Investment Decision –

Characteristics: Limited score, performed by technical experts, answer
key questions, degree of rigor commensurate with stage of project
development.
Objectives: Provide detailed technical analysis of critical design
features.

 INVESTMENT PHASE (IMPLEMENTATION PHASE)

After the pre-investment, investment or implementation of the pre-investment
study and analysis will determine if these study and analysis will economic
growth or deficiency to the company.

5 Stages of Investment Phase

1. Project and engineering designs
2. Negotiations and contracting
3. Training
4. Construction
5. Plant commissioning

 OPERATIONAL PHASE
Relates to the commencement of actual production, marketing and distribution
of goods to achieve projected goals of the firm.