A Beginner’s Guide to Project Cycle Management

Every project has a beginning and an end, and the stages it goes through from conception to completion are collectively called the project life cycle.

A project is typically subdivided into several life cycle phases that include project planning, project execution, and project closure. Each phase has a specific purpose, follows precise steps, and uses a specific set of tools to produce a desired outcome.

The goal, ultimately, is to break down the total workload into smaller, bite-size chunks, which are easier to manage and monitor. This enables the project to better stay on schedule, keep within budget, and follow quality guidelines.

One thing we know for sure about projects: A one-size-fits-all solution never works, which is why project managers and their teams employ the most appropriate project management approach on each project. Project cycle management is one such approach.

Overview: What is project cycle management?

Project cycle management, or PCM, is a phase-based project management framework developed by field experts and practitioners who saw the need for an alternative to project management methods largely copied from other organizations which were, unsurprisingly, inappropriate for their projects.

It was adopted in 1992 by the European Commission and is largely a European methodology, but can be used by any organization anywhere in the world.

Project cycle management’s primary objective is to adhere to stakeholder expectations while also addressing the difficulties and complexities likely to crop up throughout the project phases.

It follows six life cycle management phases:

• Programming
• Identification
• Formulation
• Financing
• Implementation
• Evaluation

Some of the cycle phases may be named differently, and the activities within each phase may be tweaked to address specific organizational requirements. Certain entities or government agencies adopting the method may even only use five project life cycle phases instead of six, but the focus of each phase is to clarify the project management processes involved and simplify decision-making.

How project cycle management works

To understand how project cycle management works, consider some of its noteworthy characteristics below:

• It is linear or progressive -- meaning, it reads like a book. Each stage has to be complete before the project team can proceed to the next one.
• At the end of each stage, stakeholders decide whether to move on to the next stage, terminate the project altogether, or perform more work before continuing to the next set of project steps.
• It aspires to achieve sustainable results that go beyond the life of the project. To achieve this, PCM typically requires the participation of the project’s key stakeholders in the problem-definition and decision-making processes.
• It leverages the methods and tools used in the logical framework approach, or LFA, a project design and planning methodology that relies heavily on analysis to diagnose and solve problems and develop a project management timeline and budget. LFA is widely used in international development projects, by donor organizations, and in the private sector, such as healthcare.
• It requires the production of key quality documents for each phase to aid in decision-making.
• It banks on the outcomes of past projects -- lessons learned, essentially -- to provide direction for upcoming ones.

The 6 phases of project cycle management

Let’s discuss the phases of a project that’s using the PCM approach in more detail.

The six phases of project management in PCM. Image source: Author

Phase 1: Programming

This is the “negotiation” phase in which situations are analyzed so problems, constraints, and opportunities can be identified. Goals are clarified, which enables the project cycle manager to identify suitable project ideas and estimate a budget.

An example activity in this phase is a project manager arranging a meeting with the donor organization and the aid recipient, which can be a country or another organization, to discuss the specific problems needing support and determine each party’s objectives.

Phase 2: Identification

In this phase, the problems, needs, and project ideas identified in the previous phase are more closely examined. It involves consulting with possible stakeholders and subject matter experts to further analyze the problems, identify how they can be addressed, and decide if supplemental studies are necessary to put together a project.

At the end of the identification phase, a document known as the project identification report is generated. It identifies the most relevant project options to pursue and explains the rationale behind the recommendations.

Phase 3: Formulation

Sometimes called the appraisal stage, the formulation phase is when stakeholders discuss project ideas to flesh out the specifics and identify the significant aspects, e.g., expected results and impact, relevance, feasibility, and sustainability.

It’s at this stage that a project idea turns into an operational plan with comprehensive resource and implementation schedules. At the end of this phase, stakeholders decide whether to create a funding proposal for the project.

Phase 4: Financing

During this stage, the agency that will finance the project examines the funding request and then issues a go/no-go decision. If approved, a financing agreement between the funding organization and the implementing agency is then drafted to formalize the project.

Phase 5: Implementation

The implementation phase is the project execution phase, and it’s usually the lengthiest phase of all. It’s divided into three periods: inception, main implementation, and closure. Depending on the project, it can take months or years to complete. In this phase:

• Project teams and relevant stakeholders carry out what’s stated in the project management plan.
• Key stakeholders assess the project’s outcomes or deliverables for quality. Actual schedules and financial spending are compared against baselines, making adjustments as necessary to account for changing circumstances and ensure that strategic objectives are met.
• Project teams use project management software tools such as Gantt charts, work baseline structures, responsibility matrices, resource availability reports, timesheets, and kanban boards to keep the project on track.
• Predetermined communication strategies are used to disseminate information to the right people at the right time.

Phase 6: Evaluation

During this stage, which can be done at the end of the project, throughout the duration of the project, or even years after the project has been completed, stakeholders evaluate the project to identify what has been achieved, what went well, what could have been done better, and whether or not the objectives of the project have been met.

Lessons learned are then applied to the remainder of the project or to future projects.

Final word on project cycle management

Project cycle management defines the structure of the different phases of project management, including the activities and tools to be carried out and implemented within each phase.

Although more popular in the European Union, it’s a universally applicable approach. It’s linear -- meaning one stage has to be complete before proceeding to the next -- with each phase focused on describing the processes to use and enabling decision-makers to make the right decisions.