163 This study critically analyzes how the theoretical concept of Capital Investments Plan (CIP) can be employed in order to better understand the financing decisions regarding various investment project undertaken by the Cluj-Napoca City Hall. Different financing scenarios are then analyzed. CAPITAL INVESTMENTS PLAN FOR 288 STREETS FROM CLUJ-NAPOCA Paul ZAI Teaching Assistant, Department of Public Administration, Faculty of Political, Administrative, and Communication Sciences, Babeş-Bolyai University, Cluj- Napoca Adrian Mihai INCEU Senior Lecturer, Department of Finances, Faculty of Economics, Babeş-Bolyai University, Cluj-Napoca Dan Tudor LAZĂR Associate Professor, Department of Public Administration, Faculty of Political, Administrative, and Communication Sciences, Babeş-Bolyai University, Cluj- Napoca Transylvanian Review of Administrative Sciences, 16 E/2006, pp. 163-173 The theoretical framework regarding the concept of “Capital Investments Plan” has already been addressed in depth in the literature1. Therefore, this analysis 1 Adrian Mihai Inceu, Dan Tudor Lazăr, „Managementul financiar al comunităţilor locale”, ISBN 973-99690-3-8, Ed. Gewalt, Cluj-Napoca, 2000; Ed. Marineasa, Timişoara, 2003, http://www.civitas.ro/docs/management_financiar. doc; Dan Tudor Lazăr, Adrian Mihai Inceu, “Metodele bugetelor pe programe şi performanţă”, Revista Transilvană de Ştiinţe Administrative (ISSN 1454-1378), nr. 3(12) 2004, pp. 99-105; Adrian Mihai Inceu, Dan Tudor Lazăr, „Programul de investiţii de capital”, Revista Transilvană de Ştiinţe Administrative (ISSN 1454-1378), nr.2(5) / 2000, pp. 190-199; Dan Tudor Lazăr, Adrian Mihai Inceu, Paul Zai, „Elemente de fundamentare a cheltuielilor municipiului Baia Mare folosind metode moderne de elaborare a bugetului”, în vol. “Lumea financiară – Prezent şi perspective”, Ed. Casa Cărţii de Ştiinţă, Cluj-Napoca, 2004 (ISBN 973-686-660-2), pp. 317-324; 164 focuses on a case study that illustrates how this concept could be employed in practice in order to analyze the financial decisions of local municipalities. In order to better understand the method of Planning, Programming and Budgeting Systems (PPBS), the concept of capital investment program (CIP) was employed for a public works project involving 288 streets in Cluj-Napoca Romania. In the case study the street rehabilitation program in Cluj-Napoca is briefly described and critically assessed in light of the aforementioned methods. The streets that are part of this program are located in the city’s most important neighborhoods: Andrei Mureşanu, Aurel Vlaicu, Bulgaria, Central-Horea, Dâmbu Rotund, Georgheni, Grigorescu, Gruia, Iris-Oaşului, Manaştur, Mărăşti, Plopilor, Someşeni, Zorilor, N. Titulescu, and Cordoş. The analyzed program aims to rehabilitate the most important streets from each of these neighborhoods. The table below shows the number of streets in each neighborhood that are going to be rehabilitated in the near future. Table 1 Neighborhood Name Number of Streets Andrei Mureşanu 30 Aurel Vlaicu 8 Bulgaria 14 Central-Horea 14 Cordoş 12 Dâmbul Rotund 46 Gheorgheni 7 Grigorescu 15 Gruia 26 Iris-Oaşului 21 Mănăştur 6 Mărăşti 12 Plopilor 7 Someşeni 45 Titulescu 8 Zorilor 17 The indicators used in this analysis for each street are: the surface of the street, the length of the street, number of persons who reside on a certain street, tax value, and estimated value in Euro and ROL for the rehabilitation of the street. Paul Zai, Adrian Mihai Inceu, Dan Tudor Lazăr, „Elaborarea Programului de Investiţii de Capital la nivelul bugetului judeţului Bistriţa – Năsăud”, în vol. “Lumea financiară – Prezent şi perspective”, Ed. Casa Cărţii de Ştiinţă, Cluj-Napoca, 2004 (ISBN 973-686-660-2), pp. 409-418. 165 Table 2 No. crt. Street Name Street Surface Length No Persons/st. Tax value Estimated value Euro Estimated Value Thousands ROL 1 Lunetei 1710 297 37 83.899.835 97.165 3514652,38 2 Malinului (partialy) 3580 510 103 194.748.665 203.421 7358144,412 3 Alexandru D. Xenopol 2400 240 29 517.834.335 136.372 4932847,984 4 Ioan Pop Reteganu 1860 310 86 188.840.167 105.688 3822946,336 5 Matei Basarab 1336 100 39 29.424.417 75.913 2745925,036 6 Victor Hugo 1734 80 28 45.486.666 98.528 3563954,816 7 Zaharia Barsan 1948 204 41 38.690.333 110.688 4003806,336 8 Silviu Dragomir 2660 380 11 11.439.000 151.155 5467578,66 9 Jozsef Attila 3150 350 94 97.207.749 178.988 6474353,936 ……………………… 101 Viorelelor 2300 258 11 9.453.000 181.668 6571294,896 102 Timisului 4500 650 73 270.927.917 355.437 12856867,16 103 Bobalna II 5965 600 75 156.853.498 471.151 17042473,97 104 Alesd 1440 150 51 50.841.333 413.740 14965803,28 ……………………… 283 Morarilor 1750 250 23 26.330.667 149.454 5406050,088 284 Orzului 1348 170 80 36.106.834 115.122 4164192,984 285 Scolii 2170 310 119 96.992.999 185.323 6703503,556 286 Oradiei 2164 340 6 2.116.000 184.810 6684947,32 287 Triajului 2880 320 19 6.717.666 235.959 8535108,948 288 Tribunu Andreica 2700 300 114 94.919.417 230.586 8340756,792 The rehabilitation cost (in Euro) was estimated taking into consideration the surface of the street, the length of the street, and the condition of the street. Our costs are estimated in Euro because the bonds were issued in Euro with a value of 15.000.000. For financial calculation purposes the exchange rate of Euro into ROL is 35.705 ROL/Euro. This value will be used for different calculations in the scenarios presented in the last section of the paper. For simplicity, for each street was given a number starting from 101 to 388. The main reason for assigning these numbers was to avoid a possible confusion with the numbers assigned for the evaluation criteria. The following step in the proposed analysis was to establish a score based on 8 criteria. The criteria are: • intersection with the main streets, • the location of the street, • the volume of traffic on the street, • the number of persons who live on that street, • the amount of taxes collected paid on that street by the persons who live there, • the number of lanes on each street, • access to residence areas, • how many public transportation vehicles operate on a given road. In the following paragraphs an explanation of how scores for each criterion were assigned is provided. If the street is in fact a main street 20 points were assigned, 15 points if the street intersects with 2 or more main streets10, if it intersects with 1 main street 5, and 0 if it doesn’t intersect with any main street. 166 Intersection with principal streets S core for In te rse cti on wi th pri n ci pal stre e tsmain st reet s; 20 int ersect 2 main st reet ; 15 int ersect 1 main st reet ; 10 int ersect 0 main st reet ; 0 0 5 10 15 20 25 sc or e B Position of the street C Traffic on the street D Number of persons E Tax F Lines G Street with access at populated zone H Passed by RATUC vehicles Note: all scores assigned were given by the technical departments, taking into consideration the specific features of Cluj-Napoca S core for posi ti on of th e stre e t cent er; 20 neighborhoo d; 10 periphery; 0 0 5 10 15 20 25 sc or e S core for traffi c vehicles above 1700; 20 1301 and 1700 vehicles; 15 851 and 1300 vehicles; 10 426 and 850 vehicles; 5 0 and 425 vehicles; 0 0 5 10 15 20 25 sc or e S core n u m be r of pe rson sover 1000 persons; 20 500-1000 persons; 15 100-500 persons; 10 10-100 persons; 5 0-10 persons; 0 0 5 10 15 20 25 sc or e S core for tax val u eover 500000; 20 50.000 – 500.000; 15 1.000 – 50.000; 10 0-1.000; 5 0; 0 0 5 10 15 20 25 sc or e The scores for the second criterion (the position of the street) were assigned as follows: 20 points if it is situated in the center of the town, 10 if it is situated in the center of one neighborhood, and 0 if it is located at the periphery. With regard to the traffic criterion the scores were assigned as follows: 0 points if the average number of vehicles on that street at peak hours is between 0 and 425 vehicles, 5 points if the average number of vehicles on that street at peak hours is between 426 and 850 vehicles, 10 points if the average number of vehicles on that street at peak hours is between 851 and 1300, 15 points if the average number of vehicles on that street at peak hours is between 1301 and 1700 vehicles on congestion hour, and 20 if the average number of vehicles on that street at peak hours is above 1700 vehicles. 167 Score for no. of lines 4 lines; 20 2 lines; 10 1 line; 0 0 5 10 15 20 25 sco re S core for th e acce ss to re si de n ce are asst reet s wit h blocks; 20 st reet s wit h single family house and blocks; 10 st reet s wit h single family house; 0 0 5 10 15 20 25 sc or e S core for Passe d by Pu bl i c ve h i cl e s2 Vehicles; 20 1 Vehicle; 10 0 Vehicle; 0 0 5 10 15 20 25 sc or e At the following criteria, number of persons, we used the following score: 20 for over 1000, 15 for 500-1000, 10 for 100-500, 5 for and 0 for 0-10. In regard to the tax value we gave 20 points for taxes over 500.000 thousands ROL, 15 between 50.000 – 500.000 thousands ROL, 10 between 1.000 – 50.000 thousands ROL, 5 between 0-1.000 thousands ROL and 0 for 0 ROL. For the sixth criteria we gave the following points: 20 for 4 lanes in one direction, 10 for 2 lanes in one direction and 0 for one lane. Regarding the following criterion (the access to residence areas) the following scores were assigned: 20 points for streets with blocks, 10 for streets with single family houses and blocks and 0 for streets with only single family houses. For the last criterion we gave 20 points for over 2 Public Transportation Vehicles, 10 points for 1 and 0 for none. Table 3 PROJECT Objectives Score Criteria ..A.. ..B.. ..C.. ..D.. ..E.. ..F.. ..G.. ..H.. 101 Lunetei 0 0 5 10 10 0 20 0 102 Malinului (partially) 0 0 10 15 10 0 20 0 103 Alexandru D. Xenopol 0 0 5 20 10 0 20 0 104 Ioan Pop Reteganu 0 0 5 15 10 0 20 0 105 Matei Basarab 0 0 5 10 10 0 20 0 106 Victor Hugo 0 0 5 10 10 0 20 0 107 Zaharia Barsan 10 0 5 10 10 0 20 0 108 Silviu Dragomir 10 0 5 10 10 0 10 0 109 Jozsef Attila 10 0 5 10 10 0 20 0 …………………. 144 Viorelelor 10 0 5 5 10 0 20 0 145 Timisului 10 10 5 15 10 10 20 0 146 Bobalna tronson II 10 0 5 15 10 0 20 0 147 Alesd 0 0 5 10 10 0 20 0 ………………….. 383 Morarilor 0 0 5 10 10 0 20 0 384 Orzului 0 0 5 10 10 0 20 0 168 385 Scolii 10 0 10 10 10 0 20 0 386 Oradiei 0 0 0 1 10 0 0 0 387 Triajului 10 0 5 5 10 0 20 0 388 Tribunu Andreica 0 0 10 10 10 10 20 0 Although we wanted to have as criteria the parking spaces on the street we thought that this is not an appropriate criteria because in Cluj-Napoca the parking lanes are insufficient and so people are choosing to park even if they broke the law. After this step we have to calculate the total score of all 8 criterions. The maximum score that can be obtained is 8 criterions multiply with maximum score 20 equal 160 points. Table 4 PROJECT Estimated Value Euro Total Score COST/ IMPACT 101 97.165 45 2159,4 102 203.421 55 3698,56 103 136.372 55 2479,49 104 105.688 50 2113,76 105 75.913 45 1686,96 106 98.528 45 2189,51 107 110.688 55 2012,51 108 151.155 45 3359,00 109 178.988 55 3254,33 …………… 144 181.668 50 3633,36 145 355.437 80 4442,96 146 471.151 60 7852,52 147 413.740 45 9194,4 …………….. 383 149.454 45 3321,20 384 115.122 45 2558,27 385 185.323 60 3088,72 386 184.810 11 16800,91 387 235.959 50 4719,18 388 230.586 60 3843,10 From all 288 streets we have the biggest scores for the following streets: 160 for 21 Decembrie Street, 140 for Campina and Unirii Streets, 135 for Eroilor and Alexandru Vaida Voivod Streets, 130 for Republicii Street. The lowest scores received are the following: Scărilor Alley (10 points), Alexandru Davila Street, Căruţaşilor Street, and Măgura Steet (20 points), Tufei Street, Pârâului Street, and Aramei Street (30 points), Sputnic Street and Barc III Street. Using the cost-impact matrix a cost-impact indicator was calculated for all 288 streets. Based on the data collected from The City Hall a ranking of all projects was created by arranging in an ascending order the cost-impact column. Based on this ranking the top priorities were selected. After we have made a top we will create different scenarios. From this top we can see that the most important street is General Gheorghe Pomut, and the following ones are Matei Milo, Tufei, Ion Andreescu, Ion Neculce, Rarău, Virgil Oniţiu and the less important are Nod IRA, Trifoiului, Oradiei, 21 Decembrie Boulevard, Frunzişului, Oaşului and Nod N Streets. Table 5 Objectiv Estimated value Euro Total Score COST/ IMPACT TOP PROJECT 224 General Gheoghe Pomut 4.587 45 101,93 1 231 Matei Milo 6.452 55 117,31 2 225 Tufei 3.652 31 117,81 3 227 Ion Andreescu 6.574 50 131,48 4 228 Ion Neculce 7.992 45 177,60 5 220 Rarau 10.524 50 210,48 6 226 Virgil Onitiu II 9.861 45 219,13 7 233 Alexandru Donici 6.848 30 228,27 8 230 Macului 14.158 55 257,42 9 …………………… 344 Paraşutiştilor 117.786 55 2141,56 144 101 Lunetei 97.165 45 2159,4 145 …………………… 137 Nod IRA 827.743 61 13569,56 282 123 Trifoiului 636.460 45 14143,56 283 169 386 Oradiei 184.810 11 16800,91 284 160 B-dul 21 Decembrie 3.397.017 160 21231,36 285 286 Frunzisului 1.574.157 60 26235,95 286 281 Oasului (II) 1.321.014 50 26420,28 287 287 Nod N 1.872.572 60 31209,53 288 Financing scenario no. 1.Under this scenario, the financing of street rehabilitation projects comes from the local budget. In 2005, 640,705,000 ROL were appropriated to finance such projects. By adding together the costs of individual street rehabilitation projects, will be obvious that the appropriated money is enough for financing just a limited number of projects. Based on the 2005 budget appropriation, the municipality can finance during the first year the rehabilitation of 201 streets, the first being the General Gheorghe Pomut Street and the last being the Tractoristilor Street. After the Tractoristilor Street is fully financed, the remaining available money from the 2005 budget appropriation is 1.333.937 thousands ROL. In 2006, the municipality will be able to finance a part of the remaining streets in need for rehabilitation. We can finance the following 66 streets starting with the Silviu Dragomir Street and ending with the Pastorului Street. After the Păstorului Street is completely funded, enough money will be left over in order to finance also the rehabilitation of the Câmpina Street. In 2007, an additional 20 streets (from Câmpina Street to Oaşului Street) will be financed by the municipality. After the Oasului Street is fully financed, the municipality will still have available 60.191.287 thousands ROL. From the available sum of 60.191.287 thousands ROL the municipality could partially finance the street Nod N in 2008. The sum available in 2008 is 7,543,388 thousands ROL. By applying a simple calculation formula (dividing 1,929,658,388 thousand ROL to 640.705.000 thousand ROL) it can be easily noted that the entire number of rehabilitation street projects (288) can be financed in 3,01 years. Table 6 OBJECTIV TOP Total score Estimated Value thousands ROL CUMULATED FINANCING AVAILABLE PROJECT 224 General Gheoghe Pomut 1 45 165,921 165,921 231 Matei Milo 2 55 233,382 399,303 225 Tufei 3 31 132,100 531,403 227 Ion Andreescu 4 50 237,795 769,198 228 Ion Neculce 5 45 289,087 1,058,284 220 Rarau 6 50 380,674 1,438,958 133 Magura 199 21 2,523,757 625,438,043 178 Graurilor 200 55 6,646,750 632,084,793 323 Tractoristilor 201 60 7,286,271 639,371,063 640,705,000 1,333,937 108 Silviu Dragomir 202 45 5,467,579 4,133,642 113 Dimitrie Bolintineanu 203 65 7,995,314 12,128,956 342 Prieteniei 265 35 7,995,748 607,828,587 210 Vrancea 266 85 19,514,251 627,342,838 362 Păstorului 267 45 10,398,220 637,741,059 640,705,000 2,963,941 152 Campina 268 140 32,913,554 29,949,613 219 Madach Imre 269 55 13,019,533 42,969,145 286 Frunzisului 286 60 56,940,407 532,729,995 281 Oasului 287 50 47,783,718 580,513,713 640,705,000 60,191,287 287 Nod N 288 60 67,734,674 7,543,388 1,929,658,388 3.01 170 Financing scenario no. 2 Under this scenario, the financing of street rehabilitation projects comes from both the local budget and a loan. The community can obtain a loan no higher than 20% of its general revenues. By employing a simple calculation formula (20% multiplied by 2.677.900.667 thousand ROL), the maximum amount of a loan the municipality can get is 535.580.133 thousands ROL. Even tough the borrowing limit of the municipality was determined to be at 535.580.133 thousand ROL, under this scenario it was decided to make merely a 300.000.000 thousands ROL loan for the financing of street rehabilitation projects. The rationale for not using the entire borrowing capacity of the municipality towards the financing of street rehabilitation projects is simple: there may be other needs a city has despite roads and that need to be financed through municipal loans. We have cumulated the sums from different projects and when the sum was close to 940.705.000 thousands ROL we financed the project in 2005. This sum of 940.705.000 thousands ROL was obtained adding 640.705.000 thousands ROL to 300.000.000 thousands ROL. In this scenario the situation is different from the one in scenario no 1. In 2005 we can finance 237 projects from General Gheorghe Pomut Street to Predeal Street. By making a comparison between scenario no 1 and scenario no 2 we can observe that if in the scenario no 1 all the projects can be financed in 3,01 years in scenario no 2 all the projects can be financed in 2,31 years. Table 7 FIN WITH LOAN PROJECT OBJECTIVE TOP Total score Estimated Value thousands ROL CUMULATED FINANCING AVAILABLE 224 Gen. Gh. Pomut 1 45 165,921 165,921 231 Matei Milo 2 55 233,382 399,303 225 Tufei 3 31 132,100 531,403 227 Ion Andreescu 4 50 237,795 769,198 228 Ion Neculce 5 45 289,087 1,058,284 220 Rarau 6 50 380,674 1,438,958 292 Oituz 236 45 7,091,340 914,544,272 189 Busuiocului 237 65 10,275,163 924,819,435 125 Predeal 238 65 10,280,878 935,100,313 940,705,000 5,604,687 143 Garoafelor 239 45 7,142,704 1,538,017 145 Timisului 240 80 12,856,867 14,394,884 386 Oradiei 284 11 6,684,947 693,617,689 160 B-dul 21 Decembrie 285 160 122,876,899 816,494,588 286 Frunzisului (varianta) 286 60 56,940,407 873,434,995 281 Oasului (II) 287 50 47,783,718 921,218,713 940,705,000 19,486,287 287 Nod N 288 60 67,734,674 48,248,388 1,929,658,388 Y 2.05 Financing scenario no 3. Under this scenario the situation is significantly different from the one portrayed under scenario number 2. In 2005 214 projects will be financed starting with General Gheorghe Pomut Street and ending with Grivitei Street. The available sum that will remain from 2005 is 6.147.711 thousands ROL. From this sum we can partially finance Malinului project. The situation is different in 2006, when the projects starting with Grivitei Street and ending with 21 Decembrie Street will be fully financed. The remaining amount of money is 40.571.412 thousand ROL. So in 2006 the municipality will be able to finance 71 streets. In 2007, 3 projects will remain to be financed. 171 Table 8 Expenditures Thousands ROL Increase Rate Recalculation after ROL dollar Exchange rate Recalculation after inflation Years ROL/ dollar Expend. dollar Increase Rate Inflation Expend. price 2004 Increase Rate 2004 521248 1.963 32800 15,891,707 1.955 116 521248 1.693 2003 265492 1.349 32655 8,130,210 1.381 122.5 307,971 1.101 2002 196848 1.500 33440 5,886,603 1.417 117.8 279,721 1.273 2001 131248 1.266 31597 4,153,812 1.039 130.4 219,701 0.971 2000 103670 25926 3,998,689 140.7 226,292 Average 1.519 1.447934319 1.25939462 General Average 1.408932857 Table 9 ESTIMATED EXPENDITURES Expenditures Thousands ROL Expenditures CUMULATED Thousands ROL 2004 521248 521,248 2005 734,403 1,255,651 2006 1,063,368 2,319,019 2007 1,539,687 3,858,706 2008 2,229,366 6,088,072 2009 3,227,975 9,316,047 2010 4,673,896 13,989,942 2011 6,767,494 20,757,436 The third scenario was created by using a well-known method namely the increase and decrease method. Using data from the Cluj-Napoca budget, it is easy to notice that the 2000 budget was 103.607.581 thousands ROL, in 2001, 131.247.500 thousands ROL, in 2002, 196.847.954 thousands ROL, in 2003, 265.491.536 thousands ROL, and in 2004, 521.248.000 thousands ROL. According to the budget department from Cluj-Napoca city hall the street expenditures will be 640.705.000 thousands ROL in 2005 and 630.000.000 thousands ROL in 2006. According to our method of estimation the values are different: 734.403.000 thousands ROL in 2005 and 1.063.368.000 thousands ROL in 2006. In the following paragraphs we will explain how we applied the method. First as we said we took the expenditures from 2000 to 2004. Then we will calculate the increase rate taking into account the expenditures by dividing the expenditures in the current year to the next year; an average of the increase rate will be calculated by dividing the sum of the increase rate from all the years taken into consideration to the next years. To obtain a precise increase rate we take into consideration the ROL – dollar exchange rates, and the inflation rate. So in order to calculate the increase rate we divided the expenditures from 2004 (521.248.000 thousands ROL) at the expenditures from 2003 (265.492.000 thousands ROL). We will continue this process by dividing the expenditure from 2003 (265.492.000 thousands ROL) to the expenditures from 2002 (196.848.000 thousands ROL), then we divide the expenditure from 2002 to the expenditures from 2001 (131.248.000 thousands ROL) and then we will divide the expenditures from 2001 to the expenditure from 2000 (103.670.000 thousands ROL). So we will obtain the followings rates of increase 1,266 in 2001, 1,500 in 2002, 1349 in 2003 and 1,963 in 2004. In order to make the re-calculation after the ROL/dollar exchange rate we will use of course the expenditures from each year and the exchange rate from each year. If we multiply the expenditure of each year with the exchange rate from each year we will obtain the expenditures in dollars. The calculating method for increase and decrease rate is applied in the same way as it was at the first rate of increase. So if we divide the expenditures in dollars from 2004 at the expenditures from 2003 (8.130.210 dollars). After the calculations we will obtain a rate of increase in 2004 of 1,955, in 2003 1,381, in 2002 1,417 and in 2001 1,039. 172 As well as we applied the increase rate at the ROL/dollar exchange rate we will apply at the inflation and we obtained the following increase rates: in 2004 1,693, in 2003 1,101, in 2002 1,273 and in 2001 0,971. After this we will calculate an average for each increase rate so we will obtain three rhythms of increase: 1,519 for the increase rate regarding the expenditures, 1,447 for the increase rate regarding the ROL/dollar exchange rate and 1,259 regarding the inflation. By making an average from all this three rates of increase we will obtain an increase rate of 1,408. The estimation of the expenditures from 2005 will be obtained by multiplying the expenditures from 2004 with the increase rate. So if we multiply the expenditure from 2004 (521.248.000 thousands ROL) with the increase rate we will obtain an estimated expenditure in 2005 of 734.403.000 thousands ROL. All the other expenditures will be calculated the same way. Table 10 FORCASTED INCREASE RATE PROJECT OBJECTIVE TOP Total score Estimated Value thousands ROL CUMULATED FINANCING AVAILABLE 224 General Gheoghe Pomut 1 45 165,921 165,921 231 Matei Milo 2 55 233,382 399,303 225 Tufei 3 31 132,100 531,403 227 Ion Andreescu 4 50 237,795 769,198 228 Ion Neculce 5 45 289,087 1,058,284 220 Rarau 6 50 380,674 1,438,958 132 Carutasilor 211 21 2,753,196 701,275,137 144 Viorelelor 212 50 6,571,295 707,846,432 161 Clinicilor 213 110 14,477,554 722,323,985 148 Grivitei 214 45 5,931,304 728,255,289 734,403,000 6,147,711 102 Malinului 215 55 7,358,144 1,210,433 265 Alexandru Sahia 216 45 6,091,980 7,302,413 137 Nod IRA 282 61 29,941,120 870,212,711 123 Trifoiului 283 45 23,022,031 893,234,742 386 Oradiei 284 11 6,684,947 899,919,689 160 B-dul 21 Decembrie 285 160 122,876,899 1,022,796,588 1,063,368,000 40,571,412 286 Frunzisului 286 60 56,940,407 16,368,995 281 Oasului (II) 287 50 47,783,718 64,152,713 287 Nod N 288 60 67,734,674 131,887,388 1,929,658,388 2.12 It is very important to be decided that the politics of the CIP process are well integrated in others politics and financial processes, like the current process of budgeting and politics of duty. These politics must to make the distinction between the types of activities or projects that should be included in PIC and the types that should be included in the current budget. The period of time intended for the planning of the capital investments refers to the number of years that will be included in CIP-on what further period CIP will be unrolled. On a period of time longer than one or two years, it becomes more and more difficult to estimate the costs and the sources of financing. But we include in CIP only the projects that will begin over one or two years, this would affect the analyzing of certain projects on long term that could be phased on a period of time longer than two years. The projects on long term engaged all those who are involved in the 173 process to concentrate on the further needs, instead of concentrating only on the current issues. In exchange, this contributes to creation of a concord regarding the priorities and the needs of capital. In their turn, the lenders wish a focusing on the projects on long term. In the majority of the CIP process a period of three to five years represents a proper temporal environment. In the financing of the programs the following aspects should be taken into consideration: • the current expenditure and the expenditure of capital from the closed budgets; • forecast of the expenditure from 2004 to 2013; • grants: PHARE, ISPA, SAPARD, World Bank, BERD; • private contributions like public private partnership, concessions, donations, sponsors; • contracting loans. We choose the Method of Increasing or of Decreasing because the Automatic Method doesn’t allow to consider specific factors such as: • It is not known precisely which the evolution of the economy, especially the level of collected revenues will be; • The level of inflation until 2011 is hard to be accurately forecaste; • The method doesn’t allow for the completion of certain projects, this means that there aren’t necessary anymore founds for this kind of projects. However, this method has certain advantages: • It clearly shows whether the revenues are increasing; • It allows for a simpler approach with regard to the importance of the time factor and it also implies a relatively simple calculation. It would have been possible to make an econometrical forecasts; however this method would have implied a more complex and complicated approach. It demands more time, effort, and above all empirical data that are not available to researchers at this point in time (socio-demographic and economic indicators) Of course, the finances of the future will be realized allowing for the modifications of the legislation and to the inflation rate in that period. Although, every one of us is aware of the fact that there is a long time to wait until we dispose of the necessary resources for financing. The local authorities shouldn’t try to solve the issues by the identification of the capital investments. They should study and to check if there are more efficient ways to achieve the wanted results, that doesn’t require capital investments. Even if the authorities reach the conclusion that an investment is necessary, they should analyze the alternatively solutions for the respective investment.