Appendix 3: Summary of Funding Options

Central Funding

Advantages

• Ease of administration and contract management

• Agencies have no difficulty justifying uptake of the system

• Does not require re-prioritisation of departmental IT budgets.

Disadvantages

• Agencies have no direct control

• Agencies may not demand value for money, potentially even building new systems for the same job

Club Funding (Compulsory /voluntary)

Advantages

• Agencies would demonstrate commitment to implement and use the application 

• Agencies demand value for money

• Chief executives may have more control of the product and its content

• Voluntary mechanism would demonstrate clear agency buy-in, or not, as a whole.

Disadvantages

• Complex to administer with high transaction costs, unless Treasury directly removed the cost from base-line funding. Agencies then have no direct control over their contribution

• Voluntary contributions can result in non-compliance, and/or competition from other departmental priorities for spending

• Potentially difficult to add new project team members if first have to negotiate membership of the club.

Prorata Funding

Advantages

• Clear link between those paying for, and those benefiting from, the system

Disadvantages

• Requires close monitoring of usage 

• Likely to be high transaction costs, and complex to administer

• Costs may discourage private sector involvement

• Potential for government to lose control of transaction costs.

Split Funding

Advantages

• Clear link between those paying for, and those benefiting from, the system

• Transparent balance between cost centres.

Disadvantages

• High risk that shared workspace application will be displaced by other IT priorities within an agency, and result in a lack of consistency across government.

New money

Advantages

• Demonstration of Government commitment to e-government initiatives

• Will allow application development if costs are high.

Disadvantages

• Will need to compete with other Government priorities for spending

• Is not consistent with Government direction that new e-government initiatives be funded from base line spending.