Question

Why mat types of projects (short-term or long term) should government spending be used on and why? Provide examples.

Answer 1

In response to the financial crisis and its impact on the economy, the federal government has increased government spending markedly in order to stimulate economic growth. With billions of taxpayer dollars appropriated toward this effort, policy makers should examine whether federal spending actually promotes economic growth. Although the studies are not all consistent, historical evidence suggests an undesirable, long-run effect from government spending: it crowds out private-sector spending and uses money in unproductive ways.

Benefit 1: Government Funding Supports Key Business Development Areas

• Business Expansion: Facility expansions to improve production, and developing new markets through strategic marketing and sales missions.
• Capital and Technology Adoption: Purchasing new, innovative equipment that delivers new capabilities, significantly increases output, or reduces scrap.
• Hiring and Training: Developing a skilled workforce through post-secondary recruitment and continuous training for employees across the organization.
• Research and Development: Discovering new products and processes, either internally or in a collaborative research partnership, and bringing them to market through commercialization activities.

Benefit 2: Government Funding Improves Project Outcomes

• Expanded Project Scope: By accessing government funding, project managers can expand scope to encompass additional activities that would have been impossible to include otherwise. This could mean installing a new conveyor line to complement the planned purchase of new production equipment. Whereas the original scope could have only included production equipment, funding can help accomplish a more ‘complete’ project that avoids bottlenecks or other inefficiencies from limiting project success.
• Improved Project Scale: Likewise, government funding can also improve the scale of original project plans. Funding does not always need to lead to new project components, but can expand the degree to which a current project/strategy is being deployed. For example, instead of a manufacturer replacing two of their five CNC machines, all five could be replaced, leading to a significant improvement in productivity.
• Accelerated Project Timelines: Not only can small business funding improve the amount that can be accomplished through projects, but it can also speed up the time it takes for projects to start and finish. This agility helps companies respond to market opportunities and drive long-term growth. This is constantly demonstrated in technology development projects where time-to-market is essential, but is also a key factor in other types of business expansion projects.