Paul S. Sarbanes Transit in Parks Technical Assistance Center Alternative Transportation Systems (ATS) Training for Federal Land Management Agencies
Cost Estimating and Financial Sustainability Analysis MODULE 7
Agenda Definition of Financial Sustainability ATS Project Costs Project Delivery Strategies Overview of Funding/Revenue Sources Tools for Cash Flow Analysis Review
Financial Sustainability Defined Simple Definition Total available revenues balance total project costs over the project life Better Definition Adequate funding is/will be available to cover all current and anticipated costs when they occur on an ongoing basis for the life of the project Recognize that funding sources may have limited uses
Financing vs. Funding Financing: assembling cash needed to support project costs as they occur Funding: the underlying flow of funds that will be used to pay project costs and any financing costs over time
Financing vs. Funding Initial Cost Operating Cost Financing Funding $250,000 purchase price $200,000 Bank Loan @ 5% $25,000 from savings $25,000 from grandma $12,000 Taxes, utilities, insurance, maintenance per year $491,511 @ $1,365 per month for mortgage plus $1,000/month from salary Total Cost = $250,000 Total Cost = $360,000 Total Financed = $200,000 Total funding needed = $901,511
Sustainability Home Purchase Can the down payment be assembled? Can the monthly payments be made given other commitments, maintenance and upkeep food and clothing transportation Total funding needed = 3.6 times the purchase price! Some future costs are unpredictable
Financing for FLMA Transportation Typically includes only for leasing of vehicles Most facilities paid for directly by FLMA or partners Contracts with private sector entities may include financing
Key Elements of Financial Sustainability Costs Project Delivery Strategy (affects financing) Potential Revenue Sources (Funding)
Project Cost Categories Capital Cost initial Capital Cost future (rehab, replacement) Operating Cost Maintenance and Repair Cost Financing Costs (if any)
Initial Capital Costs Planning and compliance activities Facilities Equipment Payments to third parties
Facility Components Stations/Stops Parking Pedestrian/bike facilities Road upgrades or new travel ways Maintenance facilities
Facility Costs Pre-design (programming, concepts, environmental compliance, etc.) Supplemental services (land survey, geotechnical, etc.) Design development (preliminary engineering) Construction documents (final design) Construction (including supervision) Testing and start-up
Equipment Components Vehicles Administrative vehicles Maintenance equipment Fueling systems Information systems
Equipment Costs Requirements definition Specifications Procurement Design & manufacturing Delivery, testing & acceptance GSA provides acquisition support for standard equipment
Accurate Capital Cost Estimates Complete, accurate definition of the project Unit prices based on similar projects Recognize market effects and local construction means and methods Recognize impact of remote locations Recognize impacts of special requirements/restrictions Recognize impact of escalation Use contingencies to address unknowns
National Park Service Estimates Different classes reflecting level of project definition/design Net Construction Cost Estimates: Class C Pre-design Class B Design development Class A Construction documents
NPS Cost Estimate Format Class C Direct Construction Cost Items Location factor Remoteness factor Federal wage rate factor Contingency (preliminary design) General conditions Historic preservation factor Contractor s overhead and profit Adjustments for contracting other than standard bid Escalation Sample Class C Estimate
NPS Cost Estimate Format Class A Direct Construction Cost Items Labor, materials and equipment Location factor Remoteness factor Federal wage rate factor Contingency (if any) General conditions History preservation factor Contractor s overhead and profit Adjustments for contracting other than standard big Escalation Sample Class A Estimate
Appropriate Contingencies Design contingencies are used to address the risk that all project costs have not been identified in the estimate NPS guidance for design contingency: Class C: 15 30% Class B: 10 20% Class A: 0 10% More complex projects = higher contingency
Total Project Costs Net Construction Base Amount Construction Supervision 8% of Net Construction Contingency 10% of Net Pre-Design 5% of Net Design 10% of Net Supplemental Services 2% of Net
Cost Estimating Resources RS Means McGraw-Hill Engineering News Record Association of General Contractors Bureau of Labor Statistics Experienced cost estimators!
Typical Vehicle Costs Cutaway passenger van $60,000 - $190,000 Sprinter van $80,000 - $90,000 School bus $100,000 - $170,000 Small transit bus $150,000 - $250,000 Medium transit bus $250,000 - $350,000 Full-size transit bus $300,000 - $450,000 Highway coach bus $500,000 - $650,000 High capacity bus $500,000 - $650,000 Many options, which affect final price
Major Overhaul and Replacement Equipment Major components (engines and transmissions) Complete vehicle rehabilitation Consider extension of service life versus cost Consider technology advancements Facilities Buildings Roads, parking areas, trails
Major Overhaul and Replacement Costs Issues in estimating overhaul/replacement costs Intensity of use Seasonality of service Environmental factors Life expectancy of assets Cost escalation Project/service delivery strategy
Typical Rehabilitation Costs Minor Overhaul (Transmission) $8,000 - $10,000 Major Overhaul (Engine, Transmission and Body) $50,000+
Operating Costs Labor for operators Labor for supervision and management Labor for customer service/marketing Fuel/energy (vehicles and facilities) Marketing materials/public information Traffic and parking management Contracted services
Maintenance and Repair Costs Routine cleaning and inspection Labor for scheduled maintenance Consumable materials Labor and materials for unscheduled repairs Labor and materials for facility maintenance Labor for supervision and management
Considerations in Estimating Operations and Maintenance Costs Energy prices/availability Labor availability and skill levels; housing for workers Operating environment Service characteristics intensity, span, seasonality Service delivery strategy Type, condition and location of equipment and maintenance facilities Marketing and information strategy Related management and operations activities Escalation
Service Delivery Strategies Who provides assets? Who manages the service? Who provides the labor? What form of contracts is used? Service delivery strategies will determine the financing requirements and the resulting need for funds
Service Delivery Strategies Concessioner Service Contract with private assets Service Contract with public assets Partnership with public agency or non-profit Agency operated
Concessioner Service Delivery Private entity provides all facilities, equipment and services Example : Tourmobile, Washington, DC Revenues must come from user fees no government subsidy of operation Operating costs generally unknown (proprietary information)
Modified Concessioner Delivery Private entity provides all services. Government provides some/all equipment and facilities Examples: Yosemite Valley, Tuolumne Meadows, Mariposa Grove shuttle bus services, Yosemite National Park; Wetherill Mesa Tram, Mesa Verde National Park Revenues come from general concession operations (no user fees) Operating costs unknown
Service Delivery Strategies Contractor-operated with privately-financed facilities and equipment Examples: Rocky Mountain NP shuttle system and Point Reyes National Seashore shuttle Operating Costs: $120 - $135 per vehicle hour One year contract, renewable for three years Government may provide some facilities within FLMA
Service Delivery Strategies Contractor - operated with government-owned equipment and/or facilities Examples: Grand Canyon, Zion Operating cost: $55 per vehicle hour Lower operating cost because government provides equipment and facilities
Service Delivery Strategies Partnership Government and/or partner-owned facilities and/or equipment Examples: Yosemite Area Regional Transportation System (YARTS), Glacier NP and Acadia NP shuttle systems, Santa Ana NWR (USFWS), Maroon Bells Scenic Wilderness Area (USFS), Muir Woods NM Operating costs: $34 - $80 per vehicle hour Costs vary based on public agency cost structure
Service Delivery Strategies Agency-operated using agency owned or leased vehicles Example: LBJ NHP Operating Costs: $50 per vehicle hour (LBJ)
Funding Sources and Financing Strategies Vehicle and/or facility leasing private sector and GSA Private sector financing Bonding (for partners) Partner funding Federal funding programs
Revenue and Funding Sources Uses for some sources may be restricted User fees Direct user charges (e.g. fares, parking fees) Example: Tourmobile, YARTS Entrance fees Example: Grand Canyon, Glacier and Rocky Mountain NP Indirect user charges (surcharges on other purchases) Example: Yosemite Valley Shuttle
Revenue and Funding Sources Base funding (part of the annual budget) Paul S. Sarbanes Transit in Parks (TRIP) funding (competitive) capital and planning costs Federal Lands Highways Program (FLHP) funding Line item construction funds (NPS) Local and/or state government partner funds May include Federal Transit Administration funds as well as state and local funding sources
Revenue and Funding Sources Additional Federal Transit Administration (FTA) funding Section 5307: Urbanized Area Formula Program capital costs only Section 5309: Major Capital Investments (New Starts and Small Starts programs) capital costs only Section 5310: Transportation for Elderly Persons and Persons with Disabilities Section 5311: Rural and Small Urban Areas Program Transportation Enhancements Funds capital costs only Congestion, Mitigation and Air Quality (CMAQ) Improvement Program funds can include demonstration funding for operations American Recovery and Reinvestment Act (ARRA) funding Transportation Investment Generating Economic Recovery (TIGER) grants Transit Investments for Greenhouse Gas and Energy Reduction (TIGGER) grants
Putting it All Together Cash flow model basics Available tools Volpe National Transportation Systems Center Pro-Forma
Cash Flow Basics Reflect the selected service delivery strategy Separate capital costs from operating costs Estimate capital costs by major category Vehicles and equipment Facilities Initial and future rehab costs Estimate operating costs by major category Operating labor Maintenance labor (vehicles and facilities) Fuel and other consumables Supervision and management Other (employee housing?)
Cash Flow Basics Select appropriate timeframe for analysis Consider effects of inflation Identify revenue sources Recognize limitations on uses for some sources Some sources are competitive Re-authorization of transportation legislation may change federal sources
Cash Flow Basics Take care in estimating user fee/entrance fee revenues Add detail as project planning proceeds Consider agency regulations and policies regarding cash management
Entrance Fee Revenues Impacted by fee collection policy (private vehicle, tours, individuals, etc.) Impacted by annual pass policies Impacted by multiple entries by same visitors
Entrance Fee Revenues Grand Canyon South Rim example: 3.8 million annual visitors (2007) 1.5 million vehicles entering 500,000 vehicle entry fees actually collected
ATS Cash Flow Pro-Forma Tool Volpe National Transportation Systems Center
Caution Putting together funding sources for longterm sustainability of ATS for FLMAs is extremely challenging Transit systems throughout the nation are struggling to maintain a good state of repair for facilities Entrance fees/transportation fees used for transportation reduce revenues for other needs
Review of Key Concepts Complete project definition full costs of ownership Accurate cost estimates Rehabilitation and replacement costs Operating and maintenance costs Service delivery strategies Allowable uses for funding sources Cash flow forecasting
Discussion/Questions
What s Next
ATS Planning and Implementation Life Cycle Training for FLMAs Module 1 -Alternative Transportation Systems and the Role of ATS in Enhancing the Visitor Experience and Preserving Resources/Systems Module 2 - Framing the Need in ATS Planning Module 3 - Data Collection and Analysis Module 4 - Establishing Partnerships/ Stakeholder Participation/Public Involvement Module 5 - Formulate/Evaluate Alternatives
ATS Planning and Implementation Life Cycle Training for FLMAs Module 6 - NEPA Assessment Module 7 - Financial Cost Estimating/Financial Sustainability Module 8 - Engineering, Design and Construction Module 9 - Procurement Planning and Management Module 10 - Project Implementation
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Contact the TAC! Paul S. Sarbanes Transit in Parks Technical Assistance Center www.triptac.org helpdesk@triptac.org (877) 704-5292