WHAT ARE THE COMMON MISTAKES DEVELOPERS MAKE WHEN TRYING TO SECURE FINANCING FOR AN INFRASTRUCTURE PROJECT?

In the dynamic landscape of critical infrastructure development, securing financing for projects is a critical and often challenging endeavor. Developers, whether seasoned or novice, frequently encounter a myriad of complexities when navigating the financial landscape for their initiatives. Understanding and avoiding common pitfalls is essential to ensure the success and sustainability of critical infrastructure projects.

In this article, we will explore some of the prevalent mistakes that developers often make during the financing phase and provide some strategies that you could use to mitigate these risks and increase your chance of securing the necessary funding for your ambitious critical infrastructure projects. 

1. Lack of a detailed and comprehensive business plan: Developers often fail to create a detailed and comprehensive business plan that outlines the project's financials, market analysis, and risk assessment. This can make it difficult for investors to evaluate the project's viability and potential return on investment. Using an experienced consultant to review the project’s business plans is a way of strengthening the business plan before approaching potential financiers.
2. Underestimating the project cost: Developers may underestimate the cost of the infrastructure project, leading to inadequate funding. This can result in cost overruns and delays that can negatively impact the project's profitability. It is important to thoroughly research, not only the intended market to which the project will be developed to serve, but also the Exploration and Production Costs (EPC) costs; in the case of the latter, costs and services provide could differ significantly. Using an experienced consultant could be advantageous.
3. Failing to secure adequate funding: Developers may fail to secure adequate funding to complete the project, leading to delays or even project failure. Similar to point 2, this can be a result of poor financial planning or underestimating the amount of funding required to complete the project.
4. Lack of a strong project team: A strong project team is crucial to the success of a critical infrastructure project. Developers may fail to assemble a team with the necessary skills and experience, which can negatively impact the project's outcome. In the initial stages, costs can be a limiting factor when trying to assemble a strong project team; remember, however, that hiring consultant with specific expertise in the area you, or your initial team, lacks can be a way of securing the necessary project team and reduce ongoing costs.
5. Ignoring regulatory requirements: Developers may overlook regulatory requirements such as permits, environmental impact studies, and zoning laws, which can lead to delays and additional costs. Having an understanding of global regulations and best practice may not be enough when trying to navigate a specific market with its nuances. If necessary, use an experienced local consultants or agents that can help you navigate the regulatory and permitting landscape.
6. Failing to engage stakeholders: Developers may fail to engage stakeholders such as local communities, government officials, and other relevant parties. This can lead to opposition and resistance to the project, which can negatively impact the project's outcome. Similar to point 5, using an experienced local consultants or agents that can help you engage with the relevant stakeholders. When engaging in project development cross culturally, it is important to adhere to the strictest anti bribery and money laundering compliance, whether that is in your business registered country or the country in which the project will be developed. Remember, critical infrastructure projects are long-term and as such your reputation, integrity and track record counts.

Overall, it's essential for developers to approach critical infrastructure project financing with a comprehensive and well-planned strategy that takes into account all the relevant factors outlined above. By using these common missteps as a guide, developers can refine their approach, optimize financial strategies, and increase the likelihood of bringing their infrastructure projects to fruition.