Overview of Government Agency Project

Posted on: 10th May 2023

Question

Often, part of a government agency’s budget is devoted to capital projects. No matter how well a project and its costs are planned for, there are always residual effects on the budget and on future budgeting practices. In this assignment, you’ll overview a government agency’s project, including its effects on the agency’s budget, and you’ll consider practices and requirements to support accurate reporting of projects. 

Step 2: Research a state or local government capital project (NOT A PRIVATE SECTOR PROJECT) e.g., new building or structure, park improvements, road improvements, addition to a municipal building, the agency that is responsible for the project, and the operating budget for the agency.

Step 3: Choose one of the following options for this assignment: 

• Write a 1,050- to 1,400-word APA-formatted paper. 

OR

• Create a 12- to 16-slide Microsoft® PowerPoint® presentation with speaker notes and/or narration. 

Step 4: Address the following in your paper or presentation:

• Give a brief overview of the chosen government capital project and of the agency responsible (i.e., size and responsibilities). 

• Explain the advantages, disadvantages, and residual effects of the project on the agency's operating budget. 

• How does the project affect the debt in the short and long term?

• How does the project affect operating expenses in the short and long term?

• Explain how the operating expense for the project differs from government debt items. 

• Identify how the agency included training resources in its budget for the project. If they did not include training resources, propose how the agency could or should address training in their budget.

• Describe any evidence that the agency employed accurate reporting practices for the project. Would you suggest any differences in their approach? If accurate reporting practices are not evident, what should the agency do to ensure accurate reporting?

• Summarize your findings of the effects of the capital project on the operating budget, and make recommendations for improvement. 

Step 5: Cite a minimum of 2 peer-reviewed sources.

Step 6: Format your paper consistent with APA guidelines to include, at a minimum, the APA cover page, Introduction, level headers/titles for each required assignment discussion point, Conclusion, and Reference page.

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Solution

Overview of Government Agency Project

Based on the definition, a capital project is a government project that helps maintain or improve assets. In most instances, the local governments are the one who takes the duty of ensuring that there is improvement and good maintenance of infrastructure. The main sources of capital projects funding are loans that the government or the agency responsible for the project implementation approach lending institutions or banks. It is evident that in the United States, the art of infrastructure is well known, and the country has been at the forefront of enhancing capital projects. For that case, the capital project I would like to discuss is the California high-speed rail project, which publicly funded the railways' system under construction in California (Top 5 ongoing Mega Projects in the USA in 2020). The project is projected to connect various parts, including Anaheim Regional Transportation International. In addition, with an approximated budget of $77 billion, the project is designed to encompass over 800 miles with 24 stations. Given that the project is large, it will run through areas of the state with extremely different environmental, geographical, and economic issues. That is why it has been broken into various sections. Moreover, the agency responsible for the identified project is The United States Department of Transportation, which was responsible for the project's funding to ensure that the nation has the first-speed rail system to enhance and better connect the community with an advanced technological railway (Boyd, 2018). In addition, the design, planning and building of the project was the responsibility of the California High-Speed Rail Authority. The authority, in its view, believed that the project would contribute to an economic development cleaner environment for the people of California and its surrounding.

The advantage of the capital project I have analyzed is that it helps the USDT support growth and plan how to fund the project in the future. With the capital project, the agency can create an operating budget to plan and monitor its operational resources. Thus, the agency can raise large sums of money to invest in long-term projects like the California high-speed Rail project with the capital project. However, the capital project can disadvantage the agency's operating budget because any wrong decision in the project finance can hurt the agency's operation. Basically, the wrong budgeting for the project or delay can lead the agency to manage some of its activities because it will have to pay for the loans used to fund the project from its operating budget. The residual effects of the project include the financial as the project in future due to change in the economy cannot be able to generate the amount of money used to fund it thus leading to operating budget of agency used to repay loans.

The California high-speed rail project is a long-term infrastructure project funded by less public resources. For that case, the debt used to finance the project is paid back from the cash flow generated by the project after completion. It is evident that the project effect debt in either the short or long term if it fails to be completed on time. In most instances, a megaproject like CHSR has to work on its budget effectively so that a short delay on repayment of the debt can cause leverage ratios to the project in the short and long term (Short-term debt (n.d). Therefore, it is evident that capital projects affect debt in the short and long term because their repayment depends on the project's cash flow and net income.

For the successful completion of the CHSR project, there is a major impact it will cause on the agency's operating expenses in the short and long term. This is because a government agency must implement the budget and finance it throughout its construction process (Soares, Magalhães & Mendes, 2020). For that reason, the agency will have to cut down some of its expenses to fund the project for successful completion. Therefore, it is evident that the project affects operating expenses because it increases expenditure and allocation for short and long terms to successfully complete the project. It is evident that the project affects operating expenses because most of the funds are allocated to develop and complete the project construction.

The completion of the California High-Speed Railway project needs a significant budget that helps in the project's successful construction. In that case, it is significant that for the successful completion of the project, the construction needs operating expenses that are being allocated to the project by the government to enable the successful completion of the project. Basically, different from the government debts, project operating expenses are major money that the project spends to buy, maintain and pay the workers and is non-refundable (Short-term debt (n.d). The project operating expenses always represent day-to-day expenditures that are designed to keep the construction running. However, unlike project operational expenses, government debt is always the total amount of money when the government owes a sovereign state lender and is always required to pay interest on its debt.

From the agency's budget, it is significant that it has not included training resources in its budget for the project. Having analyzed the agency, it is evident that it only invested in grand competitive programs that partnered with the community to deliver surface transportation projects with significant benefits. Given that the agency did not include training resources in its budget for the project, it should know the importance of training resources and how it helps develop the best skill and knowledgeable individuals that would help deliver the project on time and successfully. Therefore, given the importance of training resources, it is significant that the agency finds a training budget per employee in the project as that will improve the productivity and performance of the employees within the capital project.

Moreover, based on the financial expenditure and progression of the project, it is evident that the agency did not employ accurate reporting practices for the project. This is because the total amount for the completion of the project was $77 billion, but the agency provided the agency with a grant of $24 million to advance its economic development and improve infrastructure around the place (Top 5 ongoing Mega Projects in the USA in 2020). Given that the agency has no accurate reporting, it is important to come up with operating expenses of the project that will help report the project's accurate expenditures as it progresses. Moreover, given that the project uses money, the agency should hire an external editor to help develop the exact expenses of the project as it progresses. Also, the agency should look at the balance sheet and income statement errors. By doing that, the agency will accurately report the project's operating expenses and the amount of money needed to complete the project on time.

In conclusion, it is evident that a capital project significantly affects the agency's operating budget. From the personal analysis of the California High-Speed Railway project, it is evident that the project depended on multiple funding sources, including debt, grants, and cash from the government agency, which is DOT. Basically, the operating budget is a detailed projection the project expects to spend in a given period; thus, to ensure that the project is completely successful, the project should focus on enhancing accountability on its expenditure. 

References

Boyd, A. S. (2018). The United States department of transportation. Proceedings of the IEEE, 56(4), 396-401.

Short-term debt. Corporate Finance Institute. (n.d.). Retrieved February 14, 2022, from https://corporatefinanceinstitute.com/resources/knowledge/finance/short-term-debt

Soares, C. A. P., Magalhães, M. A., & Mendes, J. R. (2020). Investment Capital Budget Method Oriented to Project Management. GSJ, 8(3).

 Top 5 ongoing Mega Projects in the USA in 2020. Construction Review Online. Retrieved February 14, 2022, from https://constructionreviewonline.com/biggest-projects/top-5-ongoing-mega-projects-in-usa

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