How do you know the project you are working on is worthy of a PhD dissertation. How does it differ from MS dissertation
I've had this discussion recently—the major differences are in the scope and independence of the work. 

There is no easy, absolute method to say "X is a master's thesis" and "Y is a PhD project" without knowing the amount of work involved in each approach, and how independent the student needs to be.

Ultimately, a master's thesis represents a body of effort designed to show that you have successfully completed the project to the satisfaction of your supervisor. A PhD thesis indicates that you have produced a sufficient intellectual contribution to your field, and that you have the capability to be an independent scientist.