Financing of Projects | Economics related to Building Industry
Financing of Projects is the most important factor determining the success of the project. Various factors influence the success of a project.
In this article, we are going to study the major factors that are responsible for the success of the Building project…
Here are the four factors:
- Sources
- Total Cost Estimation of the Project
- Utility in Financing
- Agencies and Institutions directly and indirectly influencing the economic aspects of a project
Sources
Loans are available for both purchasers and Builders from:
All Nationalized Banks,
Co-operative Banks,
Private Banks,
LIC HFL,
Finance Companies,
Insurance Companies like General Insurance Co (GIC), United India Insurance Co Ltd, National Insurance Co Ltd, Oriental Insurance Co Ltd, New India Assurance Co Ltd (for the employees), Foreign Direct Investment FDI, 20 Nationalised Banks along with Regional Rural Banks come under Public sector.
Commercial Banks, Cooperative Banks operate under provisions of Cooperative societies Law of states – for credit and non-credit purpose.
National Bank of Agriculture and Rural Development (NABARD) help Farming sector.
Total Cost Estimation of the Project
Price to be paid for a things like;
- The cost of living
- General level of prices
- The cost of price of an article
- Cost of production
- Cost of house or property
A house should be built based on an estimated cost. If the building cost increases, it will be a loss and if it can be reduced, it will be a saving for the individual as well as for the company as a whole.
Utility in Financing
Proper utility of the available financial resources in a planned manner will result in the success of the projects. Any improper planning, lack of technical expertise, under utility of technology and expertise will result in the losses of the project as well as loss to the resources of the Nation as a whole.
Agencies and Institutions directly and indirectly influencing the economic aspects of a project
Interest rates by banks, availability of materials (products, producers of materials), Governmental agencies, both central and state policies in making finances available for loans, personal savings, demand and supply, Population (Growing in India and decrease in some western countries).
Economic stability of the country, Global Economy, Location of the projects, Inflation or Deflation. All the agencies those advance Housing loans like Specialised Financing agencies like HUDCO, HDFC, National Housing Bank (NHB). More than 90% of the dwelling units are financed by Housing and Urban Development Corporation (HUDCO) for economically weaker sections and Low Income Group.