Paying for a Smart City

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Paying for a Smart City: Deloitte Report Examines the Fund, Finance or Procure Options for Smart Projects

Deloitte identifies ways cities address the money needs behind smart city projects

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NEW YORK, NY, UNITED STATES, 31 May 2018— Because many cities have difficulties paying for smart technology projects and implementing them on a wide-scale basis, Deloitte Global today released a report, “The Challenge of Paying for Smart City Projects,” identifying new business models that can make smart city projects viable and financeable.

“It’s no secret that funding something as innovative or unique as a smart city project can be complex and complicated,” said John Skowron, Deloitte Global Consulting Public Sector leader. “By breaking down the process into three digestable steps, government officials can analyze their proposed projects and technologies to understand their full range of options.”

As part of this report, Deloitte suggests a model that focuses on three steps for the delivery of a successful project:

  1. Understanding the project and its value
  2. Considering funding and finance options
  3. Determining relevant procurement and delivery methods

“Financing doesn’t have to be a major hurdle to becoming a smart city,” said Michael Flynn, Deloitte Global Financial Advisory Public Sector leader. “There are numerous financing options available, however, the trick is matching the project to the most appropriate financing tool. To do that, the project team should fully understand a number of key factors such as the project’s potential cash flows, the level of overall value generated and how a fair share can be captured, the range of financing options available and the technology risk of the project. Only then can the appropriate delivery mechanism be determined.”

The report also outlines what government leaders should consider when reviewing the different options, with the following questions:

  • Revenue model—What revenue model will set your project up for success?
  • Value capture and asset recycling—What additional value does your asset generate and can some of that be captured by the public sector?
  • Financing and funding options—What funding/financing model makes the most sense for your smart city project?
  • Procurement structures—What is the optimum level of Private Sector Participation?

One of the key challenges, as outlined in the report, is the tendency to determine the financing and procurement structures in advance of identifying the business case and additional value available. Typically, private sector participation can reach 50 percent of total expenditure in infrastructure programs. With continual budget constraints, public sector should ensure it is maximizing the opportunity in the most appropriate way and this report provides helpful steps to consider. based on the steps outlined within the report.

For the full report, visit Funding and financing strategies for smart cities.

Contact

Megan Doern
Public Relations
Deloitte Services LP
+1 571 858 1990
mdoern@deloitte.com

Steve Dutton
Global Communications
Deloitte Global
Tel: +1 202 734 3207
sdutton@deloitte.com

About Deloitte

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms and their related entities. DTTL (also referred to as “Deloitte Global”) and each of its member firms are legally separate and independent entities. DTTL does not provide services to clients. Please see www.deloitte.com/about to learn more.

Deloitte is a leading global provider of audit and assurance, consulting, financial advisory, risk advisory, tax and related services. Our network of member firms in more than 150 countries and territories serves four out of five Fortune Global 500® companies. Learn how Deloitte’s approximately 264,000 people make an impact that matters at www.deloitte.com.

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