Tne identification phase sets out the stage for project preparation and implementation, it is crucial to address all the conceptual issues at this stage. Many issues encountered in preparation and implementation are rooted in the identification phase; it is also important to address them properly. Major issues to be addressed during the identification phase include: rationale for project intervention; compliance of proposed project concept and approaches with relevant IFI and government strategies and priorities; clarification of client's commitment and ownership; feasibility of project development objectives (PDOs) and time frame; suitability of technical models and methods; appropriateness of financing instruments and models; sustainability of project investment; and balance between risks and results. Depending on specific project concept and scope, application of relevant innovative approaches and practices summarized in Part 1 and further described in Part 3 could be considered. For example, the AWM investment planning approach can be used for defining water service demand, financing model and O&M arrangements in the context of local value chain and agribusiness development. The WAA approach can be used for preliminary water resources assessment.