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Findings of Institutional Requirements for Interoperable Smartcard Fare Payment Systems 19 Development of the business case is critical in defining the funding strategy. The business case identifies the estimated capital and operating costs for the project and possible future expansion of the system. At a minimum, the business case consists of the following parts: Estimated capital cost of the system; Existing operating costs; Operating and maintenance costs after system implementation; Schedule for implementation; Risk factors; Initial operational cost (start of revenue service); and Regional/management/lead agency oversight, administration, and management. Identifying specific funding sources for the interoperable fare payment project starts when the preparation of a business case is completed. The completion of the business case provides the basis for determining the relationship of capital investment balanced against long-term operat- ing costs. Once the specific sources of funding have been identified, funding agreements between the participating agencies need to be created. The inter-agency funding agreement establishes the level of capital investment and operating funding for which each participating agency is respon- sible. A commonly used strategy for allocating costs is to have each agency responsible for the deployment of its respective interoperable system components and to share operating costs based on use of the shared system components. Several formulas exist for distributing the operating costs among the member agencies. Existing projects have based these formulas on actual trans- action volume, transaction dollars processed, or a combination of both. 2.1.4 Creating a Rollout Schedule An overall project rollout schedule must be developed that details milestones for design, equipment production, testing, and implementation of the interoperable fare payment system across the participants. The rollout schedule is a critical component of operating cost. Because transaction processing and shared service, such as operating a call center, is a transaction-based business, the higher the volume, the lower the cost per transaction or call, respectively. The guid- ing principles to consider when developing the rollout schedule include Realistic milestones reflective of actual experience, Ability to fit within contractors' capabilities, Ability to be supported by the participating agencies, Customer reaction and acceptance to change, and Schedule changes in response to changing customer needs. System rollout can follow one of two approaches: Phased--Different agencies and functionalities are brought on line at different times. This approach is the most common because the disruption caused by patrons having to learn a new behavior is isolated to a specific area and thus is less resource-intensive to manage. Full Rollout--All agencies and equipment are brought on line at the same time. This approach requires extensive testing and careful preparation to successfully launch. In addition, signifi- cant resources are required to manage the first days of operation. The phased approach is typically adopted when the procurement is split among multiple sup- plier contracts. Risks associated with a phased approach include the possibility for patron con- fusion when the system works for limited agencies or has limited capabilities. Additionally, a phased approach needs to consider agencies that share existing fare products such as a period