6 Phases of Project Cycle Management – The Motley Fool

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by Maricel Rivera | Updated Aug. 5, 2022 – First published on May 18, 2022
Image source: Getty Images
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.
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:
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.
To understand how project cycle management works, consider some of its noteworthy characteristics below:
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
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.
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.
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.
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.
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:
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.
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.
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Maricel Rivera is a software and small business expert writing for The Ascent at The Motley Fool.
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