Financial Management of Construction Accounting

fiscal Management of Construction AccountingQuestions You be advising a client who is super respected in the industry as visionary and entrepreneurial. She is planning her near get word, a mixed-use developing (e.g. more or less residential units and two or leash bouffantr commercial buildings). This is to be just outside a large city near you, where infrastructure/transport links are conventional and ready for the growth.She intends the commercial element to be attractive to large world-wide businesses, perhaps as global or regional headquarters. The local government are supportive of the development on the basis that your client has concord to work with them to also develop a new hospital as part of the project.Write a letter of advice to the client outlining some options for musical accompaniment the project, explaining why she should (or shouldnt) consider them as preferable. If appropriate, you may suggest a cabal of approaches. ToSubjectProjectI appreciate the oppo rtunity to advise you regarding the procurable option for financial backing your project. I look ahead to assisting you with this project and achieving your project objectives.I would like to draw your attention to the key financing options for the proposed project. It is principal(prenominal) to remember that financing techniques/funding option constantly changed based on, for example, trends to blondness participation by financiers as inflation of values occur, and also re-create interest in mortgages as property values fall. Therefore it is grave to remember that a number of key decisions hold up to be make by those involved in arranging funding for this project.The Interest rank are likely to be lower on corporate borrow than on project-based funding, this is mainly due to the broader basis of the security available in this option. Borrowing can also be in the form of an overdraft, give or mortgage on the other hand, or by the abbreviate of securities, such as a deb enture or impart personal credit line. These stocks or bonds can be tradable on the stock market. They normally tend to deliver a set rate of interest and icy term of matureness which can at times be beneficial if the rates are to rise in the future. Banks may offer funding that are fixed or floating rates of interest for a specified finale of time.The following facts are based on your written correspondence to me go out 12th June 2016. It is worth considering the answers to the questions below.What is to be the ratio of debt to equity in funding the project?Is the finance to be project based or is it to be corporate finance?What are the arrangements for refinancing the project?Will the debt be funded by traded securities or will it be a loan?What is the term of the loan or stock?What will be the security for loan stock or loan?Will a loan be fixed or floating rate?What will be the term of the loan?Other than that you have opportunity to deploy a consortium with a financial in tuition. These are named as joint ventures andsuch joint ventures arises when two or more parties act jointly to develop this mixed used development project. In these arrangements the participating institution will normally become the eventual(prenominal) owner of the property. It is also worth noting here that joint ventures normally share the form of partnerships or joint venture (JV) companies.Highlighted below are some of the advantages of such JVsSecure adequate finance, particularly equityCan be acquired expertiseCan be reduced risk of developmentTo honor off balance sheet financing, thereby reducing record debt realize the demands of foreign investorsI hope my advice has been beneficial to you in making a decision for funding your next project. I look forward to on the job(p) with you on this project. Please do not hesitate to contact me anytime if you have any questions or require further advice.I look forward to hearing from you.Kind Regards,References Steven J. Peterso n (2012). Construction accounting and financial management. 2nd ed. - Pearson facts of life Inc.Danny Myers (2008). Construction Economics a new approach. 2nd ed. - Taylor and Francis.