One of the most pressing issues among public sector organizations is the development of new infrastructure funding models to modernize the way these organizations fund themselves. Funding is probably the most challenging aspect of infrastructure planning. In past years, much public infrastructure was funded through the issuance of debt instruments. With stubbornly low interest rates prevailing for much of the last 20 years, long-term debt markets are not an attractive investment. With the constrained budgets of provincial and federal governments, many public sector organizations depending on government funding need to consider other funding models, even if it means doing something new.
When considering funding alternatives for an infrastructure asset, the Project Team must consider some or all the following variables in its analysis:
- the size of the asset
- the useful life of the asset
- the length of time the asset will be kept
- renewal or expansion of an asset
- credit worthiness of the public sector organization
- whether it needs to own the asset
- how much risk the public sector organization is willing to assume
Once the Project Team has determined the funding requirements for its infrastructure plan, it can use this as a strategy to source funding. Thankfully, new sources of funding, which are eager to invest in the right type of infrastructure assets, have developed during the last several years.
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