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Chapter 5: Costs and Financing
In this chapter:
In the process of planning an e-Government project, e-Government planners should seek to define desired benefits, the costs associated with realizing those benefits, and the source of funding for the project. Identifying costs, benefits, risks and funding sources early on can help ensure the design of appropriately scaled projects, improve prospects for sustainability, and facilitate the development of benchmarks, which can be used to evaluate and modify projects over time.
Budgets should be designed to accommodate change, recognizing that financing needs often will grow during the life of an e-Government project. Adoption of a multi-year and government-wide strategy for e-Government may be helpful in prioritizing projects and thus ensuring long-term sustainability.
Cost and funding projections need to be realistic. While e-Government can increase the capacity to collect taxes, customs duties, and other fees, thereby increasing government revenue, these gains are often not realized and, if realized at all, may not off-set costs in the short or medium-term. And while governments might be able to reallocate resources that are freed up when offline services are replaced by e-Government applications, there will be extra costs associated with restructuring those services and training civil servants to perform them in an IT environment.
Demonstration or pilot projects have benefits, in that they may require less initial commitment of resources and can yield important lessons about feasibility, user demand, and other concerns. They can also demonstrate the value of e-Government and help secure follow-on funding. However, governments should beware: The Web is littered with links to “successful” but now defunct e-Government pilots. Planners, policy-makers and donors should be wary of pilots that have no funding model for sustainability.
Resources – Overviews on Financing e-Government:
Michael G. Mimicopoulos, “E-government funding activities and strategies.”
Angela Capati-Caruso, “E-Government Cost and Financing.”