Financing Public Engineering Projects

As an engineer, you will often be called upon to give advice on how to finance engineering projects. Having given people advice on what various engineering projects are likely to cost, people will naturally expect you to be also in a position to advise them on where they can get the money to fund the projects. At the very least, as an engineer, you will be expected to sit (and contribute intelligently) in meetings where matters to do with project financing are discussed. So you really need to be conversant with project financing issues — even if you feel that that is not a core part of your work as an engineer.

As far as public engineering projects go, some of the viable financing options include:

  1. Through tax collections: so this is a simple and straightforward approach, where tax money is collected, and then used to pay for the public engineering projects. At the end of the engineering projects, the public gets various facilities (dams, roads, power supply systems, rail roads… and so on) for day to day use. The viability of this option is in the fact that people are usually ready to pay taxes, as long as the money is used efficiently. Take, for instance, a person who works for a company like PepsiCo. When he goes to check his paystubs at the My pepsico view website, he expects part of his earnings to have been deducted, to cater for various taxes. Indeed, such an employee is likely to be keen on getting his W-2 form, through the Mypepsico portal, on an annual basis, for tax filling purposes… So people are always ready to contribute money to public coffers, as long as the money gets used in an efficient manner. And even those who aren’t willing to pay taxes have no choice in the matter – because the payment of taxes is usually a mandatory affair – whether one feels like it or not.
  2. Through loans: some public engineering projects are financed through loans (which could be concessional or commercial). The loans are then supposed to be repaid through tax collections.
  3. Through grants: unlike the loans, grants are not meant to be repaid. But in most cases, there are stringent conditions that have be met, before grants are given. Some grants come with strings attached.
  4. Through public private partnerships: this is an approach where private entities finance the public engineering projects. Then they are allowed to charge people for the use of the (public) facilities that are constructed in the projects. They keep on charging for the use of such facilities, right up to the time when they recoup their investments, and get some profit on top.

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