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OCR for page 37
The Nuts and Bolts: Development and Implementation 37 Result: The following is the result an agency can expect in terms of targets achieved, benefits realized and value added when an agency follows the recommended step outlined above: 1. A sound financial plan that standardizes financial calculations for the agency, sets reason- able targets for financial metrics, maximizes revenue and the economic potential of the air- port, and enhances opportunities for lower-cost financing and access to state and federal aid programs. Step 3: Capital Planning and Management Goals: The goals of Step 3 are to 1. Identify all new and revised projects for the maintenance and improvement of all facilities to meet the agency's goals and to accommodate priorities set by the ACP Policy in Step 1. 2. Quantify the scope, cost, schedule and operating budget impacts for all projects. Actions: The following is a list of actions, activities or tasks that should be completed during this step: Existing Condition Surveys: Monitor facility conditions and conduct existing facility condi- tion survey, as necessary. Facility Needs Assessment: Regularly assess facility needs with respect to maintenance and improvement. Alternatives Analysis: Identify and evaluate alternatives to meet identified facility needs. Eval- uate how those alternatives will meet agency's goals. Life-Cycle Cost Analysis (LCCA): Conduct LCCA of feasible alternatives. LCCA assesses the total cost of facility ownership, including initial costs and operating costs. It enables an agency to compare alternatives from a net savings perspective and determine if higher initial invest- ment will pay off in lower operating costs. Project Definition Standards: Establish and define standards for project phases and milestones to be used in developing budget estimates and project schedules. Project Worksheets: Develop a draft scope, cost, and schedule for the preferred alternatives. Pre- pare a descriptive worksheet for each project that contains all the critical project information such as project description, alternatives, cost, schedule, funding source, operating budget impact (revenue and expenses) contribution to agency goals and objectives, environmen- tal impacts, and project risk factors. See pages D-5 and D-6 Compelling Practice #6--Calculating in Appendix D for a sample project data worksheet. CIP Project Impact to Operating Budget Operating Benefit: Quantify the operating benefit and/or PHX's Capital Budgeting Return on Investment (ROI) revenue associated with all projects, as appropriate. Analysis Form requires the project sponsor to quan- Operating Impact: Assess the operational impacts of the tify the "benefit drivers," which include savings in project (e.g., loss of auto or aircraft parking) and quan- labor or expenses as well as projected revenue, and tify the expense or financial impact associated with it. See to compare that to the project costs to identify page C-7 of Appendix C for PHX's CIP Project Impacts on when the project will pay for itself. Operating Budget form. Long-Term Business Viability Analysis: Analyze the long- In addition, PHX requires the project sponsor to fill term business viability of a project using Internal Rate out a "CIP Project Impacts on Operating Budget" of Return (IRR), Benefit-Cost Analysis (BCA) and/or form to quantify what labor and expense costs might Return on Investment (ROI) analyses, as appropriate. See be associated with the project once it is operational. page C-8 of Appendix C for BCAD's Business Case Form. Similar to the BCAD Project Business Case, these two The purpose of this analysis is to determine how the elements are critical to understanding the long-term business viability of the project. benefits (such as cost savings and offsetting revenues and/or user charges) justify the expense of a project.

OCR for page 37
38 Collaborative Airport Capital Planning Handbook Cost Centers: Categorize projects by cost centers or facility type where cost recovery for oper- ating and capital expenditures for the facilities are similar (e.g., airfield, terminals, parking, etc.) in a manner that helps staff understand what is being funded and what types of trade-offs might need to be made. Examples of categories include Normal replacement, maintenance, state of good repair, system improvement and expansion. Airside, landside, and nonaeronautical. Safety and security, aeronautical, sustainability, and community mitigation. Eligibility by funding sources such as bonds, retained earnings, PFCs, CFCs, and so forth. Major versus Smaller Capital Programs: Differentiate between major capital improvement programs and diverse programs that include a mix of renovation and rehab work and smaller initiatives. Massive programs like major airport expansion programs will have con- siderable management focus, will be funded over a series of years and bond issues, and will typically track the same set of a few large projects over 3 to 6 years. Other programs will have a long list of diverse smaller projects in various cost centers with only one or two larger projects. These types of programs require numerous trade-offs and funding shifts as the rehab projects encounter unforeseen conditions that increase costs and force staff to find new funding sources. List of Proposed Projects: Generate the Project Request List, a comprehensive list of projects that staff have requested be included in the ACP. When: Capital Planning should happen at the beginning of the ACP process after the finan- cial plan has been developed, before the Programming step when the technical and financial analyses will be conducted. Leader: Lead Technical Department Knowledge: The Technical Department Leader must understand the following: Planning techniques and tasks. Phases of design and the sequencing of tasks. Horizontal and vertical construction. Project bidding. Cost estimating techniques and (software) tools. Sequencing of projects and developing project schedules. Contracting tools and techniques for planning, design and construction. Operation and maintenance of an airport and its facilities. Extensive knowledge of planning, technical and engineering principles, techniques, meth- ods, protocols and precedents. Skills: The Technical Department Leader must be skilled at the following: Developing schedules and budget/cost estimates and using the software tools to create them. Defining the scope of project. Preparing a cost estimate for planning study, design or construction project. Negotiating contracts for scope, cost and schedule. Overseeing staff conducting planning, design and construction activities. Collaborating to engage partners. Setting the example for others to follow. Team building and ability to work productively with others. Potential Departments: The Technical Department Leader could be found in a department where 1) projects are scoped, planned, designed and/or constructed; 2) budgets or costs are estimated; and 3) schedules are prepared. The Technical Department Leader might be in an engineering department, planning department, capital programming/planning department, or capital management department.