Explain project identification?

Project Identification
Project identification is concerned with the collection, compilation and analysis of economic data for the eventual purpose of locating possible opportunities for investment and with the development of the characteristics of such opportunities.
Opportunities are of three kinds:
a. Additive
b. Complementary
c. Break-through


Additive opportunities are those which enable the decision maker to better utilise the existing resources without changing the character of the business.
Complementary opportunities are those which involve the introduction of new ideas leading to a certain amount of change in the existing structure.
Break-through opportunities are those which involve fundamental changes in both the structure and character of business.
Project identification cannot be complete without identifying the characteristics of a project. Every project has three basic characters viz.,
a) Input
b) Output
c) Social costs and benefits
The input characteristic is nothing but what the project will consume in terms of raw materials, energy, manpower, finance and organisation setup.
The output characteristic is nothing but what the project will generate in the form of goods and services, employment, revenue etc.
Social costs and benefits is nothing but an impact a project will make on the society. It inevitably affects the current equilibriums of demand and supply in the economy. It is necessary to evaluate carefully the sacrifice which the society will be required to make and the benefits that will accrue to the society from a given project.
The project identification comes to an end by laying down specific project objectives clearly, concisely and without any ambiguity so that these convey one and the same meaning to all concerned.