The correct identification of business requirement and design requirement takes place during the requirements analysis stage, which involves analyzing and reconciling the needs and requirements of various stakeholders into the project design.
The first step is to define the problem that the project seeks to resolve, and this is business requirements. The design team next devises way to best implement the project, and such specifications become design requirements.
To illustrate, in a project with the business requirement to reduce the time customer service help desk executives take to locate client database, the design team identified lack of multi-search options in the database as the major constraint, and tries to design a software code that allows for faster and convenient search. The methodologies to do so, such as the programming language used, the user interface design, the various additional search options provided and other features all become design requirements.
In large organization and large projects, the business analyst lists the functional specification document that lists out the business requirements and the programmer or project leader writes down the design requirement that incorporates technical details. In small to medium projects, the project manager undertakes both these activities.