What You Have to Consider When Outsourcing Abroad ?

"Unexpected changes to payment schedules related to capital projects can create significant difficulties for finance officers responsible for cash management" remarks Steven R. Kreklow (*) in his short article ("Capital Project Cash Flow Management") of the August 2007 issue of the Government Finance Review, the membership magazine of the US-based Government Finance Officers Association.

This adverse impact on cash management and more generally budget execution can be mitigated by good budget and project management techniques described in Steven R. Krelow's article.

The author lists five recommendations to better manage investment projects:

PFM Blog assessment: Steven R. Kreklow's recommendations are fundamentally sound; their implementation should indeed facilitate oversight of capital projects and cash flow management. They are well adapted to US State and local governments--which are the backbone of GFOA's membership.

Some of his recommendations can easily be generalized and would constitute sound recommendations for middle- and low-income countries (e.g., starting with a good initial project analysis or establishing a robust capital reporting system). Others may be more difficult to implement in these countries.  For instance, budgetary transfers and capital fund reserves may be significantly more difficult to establish in low-income countries where most of the public investment is generally externally-financed.

Posted by Michel Lazare

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Steven R. KREKLOW is a senior manager in the GFOA's research and Consulting Center In Chicago, Illinois.

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