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The challenge of paying for smart cities projects

Discover the key funding approaches to successful smart cities

Often complex, with multiple sector stakeholders and unknown technology risks, smart cities projects require cities to identify innovative business models and alternative funding and financing mechanisms to make delivering smart infrastructure viable and financeable.

Australia has been at the forefront of a diversified approach to financing infrastructure, but with State and Federal Governments earmarking an unprecedented number of infrastructure projects, many of which are still in the business case phase with no clear understanding of cost, it’s critical the right funding and financing approach is taken, which is appropriate to that project and the long term goals for the infrastructure being delivered.

The challenge of paying for smart cities projects

Technology risk, sector cross-over, an inability to assign a dollar figure to the benefit or an uncertain return on investment (ROI) are just some of the impediments to financing smart city projects.

A key step in any Smart City financing effort is a plan which includes:

  • A robust business model
  • A creative approach to funding and financing sources
  • Innovative financing structures
  • Appropriate procurement and delivery methods.

While there are numerous options available to source finance, it can be challenging to match the project to the appropriate funding tool. Traditionally the public sector has been the first choice in paying for smart city projects, along with more traditional strategies including direct and indirect value capture and asset recycling.

Attracting appropriate sources of private sector capital for a given project requires effort, innovation and a sophisticated understanding of the project’s fundamental components. And while private sector financing can lead to more efficient structures, this must be supported by a secure revenue stream.

Download The challenge of paying for smart cities projects to understand the full range of options for funding, financing and procurement which can vastly increase the odds of a successful smart city initiative.

Published: June 2019

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