Planning for Project Initiation

Here's another of those questions that comes up during consulting engagements, particularly those where resource planning is an important management process.
Many organisations have a formal point at which a project is recognised as being part of the portfolio. Once a project is recognised as being official in this way, then it gets general visibility - it will have a name, perhaps a reference number, a project manager, a charter, a budget, a place on the executives regular status report, etc.
Frequently there is some kind of gate meeting for those organisations that use a Stage Gate Process. For others there may be a portfolio review committee or perhaps it's as 'simple' as getting three separate VPs signatures. Whatever the method, a common requirement is that there must be supporting information giving some kind of cost benefit analysis and, usually, more detail on probable timing, resource requirements, risk assessment and so on.
This information takes time, effort and resources to prepare. And there can be a lot of time, effort and resources involved. The issue is how does one plan for it when, technically, there is no project. There are three general approaches. Which one an organisation uses depends on its management and accounting practices and priorities.

1. Start tracking the project from the time of very first idea. Once it becomes 'official', there needs to be a way to include the effort spent in preparing the proposal in the newly approved budget - including the cases where the project gets rejected at the first gate. This approach would be relevant where the organisation is really interesting in total product costs. The problem is that there is no official plan at the outset against which time and costs can be recorded - and this makes resource planning difficult.
2. Have a specific proposal preparation project with it's own budget and approval mechanism. This would be relevant for major projects and often fits in the context where each phase of a major project would have it's own methodology, plan, budget and approval mechanism.
3. Have a pseudo project which covers 'early project activities' with resources and budget to do a range of relatively lightly defined activities. In this case there would be little formal connection between the effort for the early project proposal effort and the eventual full project. This approach would be suitable for an organisation where project proposals are fairly simple and the effort required for an individual proposal can be approved under a fairly large umbrella.