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Guidelines for Airport Sound Insulation Programs (2013)

Chapter: Chapter 11 - Program Cost Development and Funding

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Suggested Citation:"Chapter 11 - Program Cost Development and Funding." National Academies of Sciences, Engineering, and Medicine. 2013. Guidelines for Airport Sound Insulation Programs. Washington, DC: The National Academies Press. doi: 10.17226/22519.
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Suggested Citation:"Chapter 11 - Program Cost Development and Funding." National Academies of Sciences, Engineering, and Medicine. 2013. Guidelines for Airport Sound Insulation Programs. Washington, DC: The National Academies Press. doi: 10.17226/22519.
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Suggested Citation:"Chapter 11 - Program Cost Development and Funding." National Academies of Sciences, Engineering, and Medicine. 2013. Guidelines for Airport Sound Insulation Programs. Washington, DC: The National Academies Press. doi: 10.17226/22519.
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Suggested Citation:"Chapter 11 - Program Cost Development and Funding." National Academies of Sciences, Engineering, and Medicine. 2013. Guidelines for Airport Sound Insulation Programs. Washington, DC: The National Academies Press. doi: 10.17226/22519.
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Suggested Citation:"Chapter 11 - Program Cost Development and Funding." National Academies of Sciences, Engineering, and Medicine. 2013. Guidelines for Airport Sound Insulation Programs. Washington, DC: The National Academies Press. doi: 10.17226/22519.
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Suggested Citation:"Chapter 11 - Program Cost Development and Funding." National Academies of Sciences, Engineering, and Medicine. 2013. Guidelines for Airport Sound Insulation Programs. Washington, DC: The National Academies Press. doi: 10.17226/22519.
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Suggested Citation:"Chapter 11 - Program Cost Development and Funding." National Academies of Sciences, Engineering, and Medicine. 2013. Guidelines for Airport Sound Insulation Programs. Washington, DC: The National Academies Press. doi: 10.17226/22519.
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Suggested Citation:"Chapter 11 - Program Cost Development and Funding." National Academies of Sciences, Engineering, and Medicine. 2013. Guidelines for Airport Sound Insulation Programs. Washington, DC: The National Academies Press. doi: 10.17226/22519.
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Suggested Citation:"Chapter 11 - Program Cost Development and Funding." National Academies of Sciences, Engineering, and Medicine. 2013. Guidelines for Airport Sound Insulation Programs. Washington, DC: The National Academies Press. doi: 10.17226/22519.
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Suggested Citation:"Chapter 11 - Program Cost Development and Funding." National Academies of Sciences, Engineering, and Medicine. 2013. Guidelines for Airport Sound Insulation Programs. Washington, DC: The National Academies Press. doi: 10.17226/22519.
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Suggested Citation:"Chapter 11 - Program Cost Development and Funding." National Academies of Sciences, Engineering, and Medicine. 2013. Guidelines for Airport Sound Insulation Programs. Washington, DC: The National Academies Press. doi: 10.17226/22519.
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Suggested Citation:"Chapter 11 - Program Cost Development and Funding." National Academies of Sciences, Engineering, and Medicine. 2013. Guidelines for Airport Sound Insulation Programs. Washington, DC: The National Academies Press. doi: 10.17226/22519.
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Suggested Citation:"Chapter 11 - Program Cost Development and Funding." National Academies of Sciences, Engineering, and Medicine. 2013. Guidelines for Airport Sound Insulation Programs. Washington, DC: The National Academies Press. doi: 10.17226/22519.
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Suggested Citation:"Chapter 11 - Program Cost Development and Funding." National Academies of Sciences, Engineering, and Medicine. 2013. Guidelines for Airport Sound Insulation Programs. Washington, DC: The National Academies Press. doi: 10.17226/22519.
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Suggested Citation:"Chapter 11 - Program Cost Development and Funding." National Academies of Sciences, Engineering, and Medicine. 2013. Guidelines for Airport Sound Insulation Programs. Washington, DC: The National Academies Press. doi: 10.17226/22519.
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196 Program Cost Development and Funding All projects and programs, whether publicly or privately initiated, need to address funding and costs. Sound insulation programs assess cost at various junctures in their development, from program planning to pilot programs to long-range implementation. This chapter addresses the many unique aspects of securing funding and budgeting for costs within a sound insulation program and identifies the elements needed to successfully approach cost development. It will be important in the funding cycles of the program to keep records and produce documentation showing how cost has been developed and managed. 11.1 Funding, Costs, and Eligibility for Reimbursement The Airport Capital Improvement Plan (ACIP) serves as the primary planning tool for sys- tematically identifying, prioritizing, and assigning funds to critical airport projects. The ACIP also serves as the basis for distributing AIP grant funds. The ACIP identifies, for Congress and the public, the airport projects (including noise com- patibility projects) and their associated estimated costs that will be needed over the ensuing 5 years. In awarding AIP funds to sponsors, the FAA emphasizes funding the highest priority projects first. One of the FAA’s primary goals for projects in the ACIP is to improve the compat- ibility of airports with the surrounding communities. The FAA places a higher priority on fund- ing heavily noise-affected areas over those areas experiencing lower airport noise. Sponsors should work closely with their FAA point of contact early enough for effective coor- dination and to meet the necessary milestones, and they should recognize that both national and regional priorities drive the allocation of discretionary funds. For FAA-approved NCP measures, sponsors should coordinate with their FAA program manager or environmental specialist for assistance in determining the scope of eligibility for AIP and/or PFC funding to implement those measures. 11.1.1 Types and Sources of Funding Normally, funding for carrying out SIPs comes from one or more of the following sources: • AIP grants, • PFCs collected by airlines operating at the applicable airport, and • Proceeds from the airport’s disposal of noise land that is no longer needed for noise compat- ibility purposes. Less often, implementation is funded through other sources, including airport or local gov- ernment revenues. C H A P T E R 1 1

Program Cost Development and Funding 197 Each fiscal year, the FAA apportions AIP funds into major entitlement categories such as enplanements, non-primary, and state apportionment funds. The FAA distributes the remain- ing funds to a discretionary fund. Set-aside projects (Airport Noise and the Military Airport Program) receive first attention from this distribution. The funds that remain after the set- asides are true discretionary funds. Because the demand for AIP funds exceeds the availability, the FAA bases the distribution of limited AIP funds on current national priorities and objec- tives. Projects that rate a high priority will receive higher consideration for funding than those projects with lower priority ratings.1 For discretionary funds remaining after the Airport Noise and Military Airport Program set-asides, the FAA favors projects that best carry out the pur- pose of the AIP, with highest priority given to safety, security, reconstruction, capacity, and standards.2 11.1.2 Timetable of Grant Availability Implementation of a grant agreement may occur only after the sponsor satisfactorily fulfills all prerequisite steps, the FAA formally approves the project for AIP participation, and Congress approves and releases funding.3 Since the federal fiscal year ends September 30th, the FAA gen- erally needs to issue all grants by the third week of August in order to balance records in accor- dance with the president’s management agenda. Grants could be issued earlier in the fiscal year, depending on when FAA funding is appropriated for that year. A grant offer is a legal document prepared and signed by the FAA and delivered to the sponsor for acceptance in which the FAA formally makes an offer to pay a portion of the allowable costs of an approved AIP project. The signature of the sponsor accepting the grant offer constitutes a grant agreement, which is a binding agreement obligating the sponsor and the United States in accordance with the terms and conditions of the grant document. Part I of the grant agreement, FAA Form 5100-37, is the standard form to be used in preparing the grant offer.4 11.1.3 AIP Grant Application Process The FAA website contains a link to the most current version of FAA Order 5100.39, Airports Capital Improvement Plan (http://www.faa.gov/airports/aip/acip/), which provides a complete description of the process for including and prioritizing projects in the ACIP. The most current version of FAA Order 5100.38C, Airport Improvement Program Handbook (http://www.faa.gov/ airports/aip/aip_handbook/), includes a complete discussion of project eligibility and funding application requirements. Figure 11.1 illustrates an example of the process for obtaining AIP funding for an SIP. Some regional airport offices use variations of this process for airports in their regions. Check with the appropriate airport regional or district office to determine the process they use. The FAA website also includes the forms necessary to apply for AIP funding (http://www.faa. gov/airports/aip/). The forms are available in various digital formats, including Microsoft Word, Excel, and Adobe PDF. For any of the projects programmed under the AIP, an application for federal assistance, Standard Form (SF) 424, together with FAA Form 5100-100, must be submit- ted to the appropriate FAA airports office before issuance of a grant. SF-424 must be completed in accordance with the instructions on the reverse side of the form and submitted to the FAA 1 U.S. DOT, FAA, Central Region Airports Division, AIP Sponsor Guide, October 1, 2010. §100, pp. 100-101. 2 U.S. DOT, FAA, Central Region Airports Division, AIP Sponsor Guide, October 1, 2010. §100, pp. 100-101. 3 U.S. DOT, FAA, Central Region Airports Division, AIP Sponsor Guide, October 1, 2010. §700, pp. 700-701. 4 U.S. DOT, FAA, FAA Order 5100.38C, Airport Improvement Program Handbook, June 28, 2005. Appendix 6.

198 Guidelines for Airport Sound Insulation Programs Graphic courtesy of URS Corporation. Figure 11.1. Example process for applying for AIP funding.

Program Cost Development and Funding 199 with all supporting documentation, sponsor assurances, and certifications. Some regional air- port offices have prepared variations of these forms and instructions for use by airports in their regions. Before completing a form, please check with the appropriate airport’s regional or district office to determine which form to use. The completed SF-424 must be accompanied by the supporting documents listed in the fol- lowing, as appropriate. The FAA may request, on a case-by-case basis, additional information to support other federal and local requirements.5 A. Program Narrative and Cost Estimates A narrative summary statement of the project must be provided. The summary must include a description and justification for the project to be accomplished. Additionally, estimates showing the basis for the project budget must be furnished in sufficient detail to determine whether the project costs appear to be reasonable.6 B. Map Applicants must provide a map, at least 8½ in. × 11 in., that depicts and identifies the limits of the proposed project. The map should show the boundaries and proposed property rights (i.e., avigation easement) of each parcel of land included in the project.7 C. Identification of Environmental Requirements All AIP projects must be either categorically excluded or accompanied by an environmental assessment that resulted in a finding of no significant impact (FONSI) or by an environmen- tal impact statement prepared in accordance with FAA Order 5050.4B, National Environmental Policy Act (NEPA) Implementing Instructions for Airport Projects.8 Noise compatibility projects must receive appropriate FAA environmental determinations prior to consideration for AIP fund- ing. FAA Order 5050.4B indicates which noise compatibility projects require an environmental assessment or environmental impact statement and which are categorically excluded.9 A link to the most current version of this document is available on the FAA website (currently http://www. faa.gov/airports/environmental/). For example, a historic structure may be proposed for sound insulation, thereby necessitating a determination of potential environmental impacts due to the treatments. This is discussed further in Chapter 6 of these guidelines. D. Federal Register The FAA may accept a sponsor’s application at any time. Special directions are published annually in the Federal Register, which provides a deadline for submission of applications under the AIP. This announcement is for the upcoming fiscal year and covers only sponsor entitlement and cargo funds. The announcement typically states that “Absent an acceptable application by May 1, [current year], FAA will defer an airport’s entitlement funds until the next fiscal year.” This notice applies to “those airports that have had entitlement funds apportioned to them, except those non-primary airports located in designated Block Grant States.”10 Sponsors are advised, as appropriate, to comply with the schedule in the Federal Register. However, regions may request sponsors’ submissions at an earlier date to meet regional needs.11 5 U.S. DOT, FAA, FAA Order 5100.38C, Airport Improvement Program Handbook, June 28, 2005. Appendix 6. §1011, p. 172. 6 U.S. DOT, FAA, FAA Order 5100.38C, Airport Improvement Program Handbook, June 28, 2005. Appendix 6. §1011 (a), pp. 172-173. 7 U.S. DOT, FAA, FAA Order 5100.38C, Airport Improvement Program Handbook, June 28, 2005. Appendix 6. §1011 (b), p. 173. 8 U.S. DOT, FAA, FAA Order 5100.38C, Airport Improvement Program Handbook, June 28, 2005. Appendix 6. §1011 (c), p. 173. 9 U.S. DOT, FAA, FAA Order 5100.38C, Airport Improvement Program Handbook, June 28, 2005. Appendix 6. §805, p. 134. 10 U.S. DOT, FAA, Great Lakes Region Airports Division, Regional Guidance Letter 5100.20, December 12, 2007, §8, p. 4. 11 See note 4. §1012, p. 173.

200 Guidelines for Airport Sound Insulation Programs 11.1.4 Sponsor Assurances When airport owners or sponsors, planning agencies, or other organizations accept funds from FAA-administered airport financial assistance programs, they must agree to certain obligations (or assurances). These obligations require the recipients to maintain and operate their facilities safely and efficiently and in accordance with specified conditions. These obligations are estab- lished either in the acceptance of the grant offer or in restrictive covenants to property deeds.12 AIP sponsors are advised to retain a copy of the grant assurances for each project accom- plished under the AIP. Obligations imposed by the grant assurances extend beyond the comple- tion of the project. The duration of these obligations depends on the type of recipient, the useful life of the facility being developed, and other conditions stipulated in the assurances.l3 Two sets of assurances are available depending on the type of grant: (1) Airport Sponsor Assurances and (2) Noise Compatibility Assurances for Non-Airport Sponsors. The current ver- sions of these assurances can be found on the FAA’s website at http://www.faa.gov/airports/aip/ grant_assurances. PGL 12-09 stresses that AIP-funded SIP projects “meet all federal procurement and contract requirements including the Buy American Preference requirements of Title 49 United States Code 50101.”14 These requirements are further addressed in PGL 10-02, Guidance for Buy Amer- ican on Airport Improvement (AIP) or American Recovery and Reinvestment Act (ARRA) Proj- ects, issued by the FAA on February 24, 2010. Note: Program sponsors are advised to have their legal departments consult closely with their ADO to ensure that their program contract bid documents contain the requirements of the Buy American Act with respect to general provisions and certifications of conformance by manufac- turers and contractors. ACRP Project 11-01, Topic 04-04, has resulted in the publication of ACRP LRD 18: Buy America Requirements for Federally Funded Airports. It is a useful reference for sponsors and consultants who have questions regarding Buy American requirements for AIP funded programs such as SIPs. 11.1.5 Reimbursement The AIP does not reimburse sponsors for the full amount of a project’s expenses. The amount of reimbursement will vary with the type of sponsor. This participation can change with each reau- thorization action. As of the date of this publication, the following AIP participation rates apply:15 • For large and medium primary hub airports, the federal share is 75% of AIP-eligible expenses, with the exception of noise program implementation, which is 80% federal participation. • For remaining airports (small primary, non-primary, relievers, and general aviation airports), the AIP participation rate is currently set at 95% of AIP-eligible costs. The U.S. DOT is implementing a new department-wide electronic grant payment system, Delphi eInvoicing System. This system will provide a web-based standardized portal for grant- ees to electronically request grant payments and monitor payment status. All airport sponsors, including those currently submitting grant payment requests through Electronic Clearing House Operation, will be required to transition to the new system. The DOT and FAA anticipated that 12 See note 1. §720, p. 700-4. 13 See note 1. §720, p. 700-4. 14 U.S. DOT, FAA, PGL 12-09, August 17, 2012, Attachment A, §812 (c)(2), p. 1-5. 15 See note 1. §100, pp. 100–101.

Program Cost Development and Funding 201 this training and system deployment would begin in spring/summer 2012. Additional informa- tion is available on the FAA website at: http://www.faa.gov/airports/aip/grant_payments. A sponsor may not seek AIP reimbursement prior to incurring costs. Cash advances are not permitted. The sponsor must prepare an SF-271 for each drawdown transaction. Sponsors must retain supporting documentation for a period of 3 years from the date of project closeout.16 The Office of Management and Budget (OMB) Circulars A-102 and A-110, as well as 31 CFR Part 205, govern payment to recipients for financing operations under federal grants and other programs. These regulations require that payment to a grantee be limited to the minimum amounts needed and be timed so as to be in accord only with the actual, immediate cash require- ments of the grantee in carrying out the approved project.17 11.1.6 Best Practice Recommendations: Funding, Costs, and Reimbursement 1. Consult with the program’s FAA point of contact regarding the appropriate time to update the ACIP and any other process the point of contact may use to identify long-range funding needs. 2. Consult with the program’s FAA point of contact to confirm AIP and/or PFC fund- ing eligibility to implement each element of the SIP. 3. Consult with the program’s FAA point of contact to determine the appropriate grant application process and timeline. 4. Be aware of the current federal AIP participation rate for the applicable airport. 5. Have program staff trained to use the current grant payment system. 11.2 Establishing Cost Goals and Priorities Since SIPs use public funds, the program sponsor and delivery team are accountable to the funding or regulatory agencies. Formalizing cost goals and priorities is sound practice. Goals and priorities typically start out broadly defined and are revisited and fine-tuned as a program progresses through implementation. 11.2.1 Establishing Importance of Cost SIPs involve myriad stakeholders, including but not limited to the FAA, the airport man- agement entity, the municipal entity(s) in the area in which the program resides, airline companies, homeowner participants, and the general public. Each entity will have a unique perspective affecting cost. In order to develop a cost strategy sensitive to a sound insulation program’s needs, it is essential to determine a general consensus regarding the importance of establishing and managing cost. The sponsor determines whether this is done through stakeholder interaction or through indirect analysis. A proactive approach to developing the importance of cost will pay significant dividends should program cost become an issue that attracts public interest. 16 See note 1. §1500, pp. 1500–1501. 17 See note 1. §1500, pp. 1500–1501.

202 Guidelines for Airport Sound Insulation Programs Questions to address with stakeholders include: • Is it acceptable to use similar, established sound insulation programs as a benchmark for your program’s cost? • Based on general property values in the community, is there a maximum ratio of property value to program improvements establishing a not-to-exceed per-property cost? • Do the various funding participants have annual, per-property, or other funding limits? • Does the program have an established or desired duration? • Are there cost expectations by stakeholders? • Is a cost–benefit analysis appropriate? These questions serve as a starting point in evaluating specific cost issues, resulting in the clear establishment of the importance of cost to the program. 11.2.2 Establishing Priorities Program sponsors need to consider the many competing elements of a sound insulation pro- gram to determine the level of importance of each and then prioritize in regard to cost. Once cost importance and sensitivity are defined, develop priorities around these realities. Typical issues to evaluate and prioritize include: • Participation boundary issues, • Public outreach components and effort, • Demonstration home, • Sound insulation program office, • Program administration (using existing in-house resources verses outsourced administration or new dedicated in-house personnel), • Integrated verses a multi-entity program delivery team, • Treatment offerings, • Product quality and features (higher quality and more features versus lower cost), • Green initiatives and energy efficiency issues (whether to meet or exceed minimum requirements), • Air quality issues (passive or active system approach), • Retrofit verses unit replacement approach, • Egress approach, • Hazardous (asbestos and lead-based paint) materials remediation and program liability, • Construction delivery approach, • DBE participation requirements, • Warranty durations, and • Acoustical testing. Once all issues specific to the program have been evaluated in regard to desirability, level of importance, and cost implication, stakeholders are in a position to make informed decisions about program features and elements while understanding their cost implications. This is a juncture that lends itself well to a cost–benefit analysis. Recording the results of these efforts in a written document summarizing the cost issues evaluated, stakeholder input regarding cost, and any consensus that was established is an important activity to aid future decisions. This process should not be viewed as a one-time effort but rather an activity undertaken dur- ing several phases of program development and implementation. Ongoing attention to these matters creates a process responsive to cost realities over the life of a program. Established priori- ties will likely be referred to many times and help guide cost decisions as a program progresses from initial inception to completion.

Program Cost Development and Funding 203 11.2.3 Program Cost Development The unique nature of sound insulation programs does not lend itself well to the use of the stan- dard cost estimating practices for estimating administrative, professional, and construction costs of typical public works projects. However, the professionals serving the sound insulation industry have developed techniques that can be used to develop accurate projections of program cost. What fol- lows is a summary of cost estimating techniques and issues unique to the sound insulation industry. 11.2.4 Preliminary Costing Preliminary costing takes place during program planning as part of the Part 150 study. Costing should be completed by a professional with direct experience in the sound insulation industry since this process will require access to cost data from other sound insulation programs. Preliminary costing is usually prepared using benchmarking or a unit pricing approach. Both of these techniques rely on taking cost data from established sound insulation programs with characteristics similar to the anticipated program, then extrapolating preliminary costs and making adjustments to accommodate the new program. 11.2.5 Cost Refinement The majority of detailed program costing and refinement takes place during the initial phase of design, as part of deliberations with the professionals selected to carry out the program’s first phase of implementation. This activity would best be accomplished within the Part 150 study when suffi- cient time is available for such an intensive activity, but it rarely occurs during that time. The scope of Part 150 studies is so broad that attention to SIP costs is often left to be refined and further developed once the SIP starts. Often this generates some concern when funding sources and program sponsors are informed that the program will cost more than stated in the Part 150 study. Program cost refinement includes the finite definition of program elements and costing of those elements. The common elements to define and price include: • Program administration, • Public relations, • Program-specific facilities, • Professional design and construction services, • Testing costs, and • Construction costs. 11.2.6 Components of Program Cost Sound insulation programs have cost components that are similar to other public works projects in name but considerably different in practice due to the unique nature of conducting publicly funded environmental remediation on private property. Accordingly, use of standard costing curves and other traditional tools for cost estimating public works projects is not effec- tive for estimating sound insulation program costs. Provided in the following is a brief summary of the general cost components involved in sound insulation and their unique characteristics to consider when developing cost. A. Program Administration Typical program administration tasks for a public works project include securing funding, hiring design professionals, providing design direction, and administering design and construc- tion contracts. Sponsors will need to determine if administration will be performed by existing

204 Guidelines for Airport Sound Insulation Programs in-house staff and established departments or if administrative duties will be delegated to an outside team. Due to the unique aspects of sound insulation, additional administrative tasks need to be undertaken by the sponsor. These tasks include public education and outreach, participant iden- tification, solicitation and signup, homeowner agreement processing, and easement acquisition. An important technical administrative task is the establishment of program guidelines and stan- dards, which will include treatment offerings, product quality and features, green initiatives and energy efficiency issues, air quality issues, retrofit verses unit replacement approach, egress approach, hazardous materials remediation, construction delivery approach, DBE participation requirements, wage rates regulations, and warranty durations. Since programs have durations from a few years to in excess of 10 years, it is important to develop standard policy and procedure documents to provide consistency over the extended program duration. These unique, one-time, and recurring administrative efforts often involve the establishment of new sponsor positions or the use of professional consultants, and they need to be considered in developing anticipated program costs. B. Public Relations As discussed in these guidelines, sound insulation programs involve myriad stakeholders with a variety of perspectives, so programs require a proactive approach to public relations. The one-time start-up and establishment costs of this task and annual recurring costs need to be considered. One-time and establishment costs of public relations may include initial stakeholder meetings, establishment of a written public relations plan, preparation of standard literature, building the program’s website, and designing a newsletter. Recurring costs typically include public presenta- tions, distribution of informational materials, and response to almost daily inquiries regarding a variety of issues. In most cases, establishment of a public relations plan requires an experienced public relations manager or team. C. Program-Specific Facilities Whereas most public works projects conduct administrative duties within the confines of their existing physical office space, sound insulation programs typically use additional facilities to support their interactions with program participants and their intense administrative and public interaction functions. Program-specific facilities may include a product showroom, a demonstration home, and a dedicated sound insulation administrative office. Product showrooms are used to display the products that will be incorporated into an SIP, allowing prospective homeowner participants to become familiar with SIP product offerings. Similarly, demonstration homes typically involve a program acquiring an individual home within the SIP boundaries and sound insulating the home using the various products to be used for the program. Prospective homeowner participants may tour the home to become familiar with SIP treatments. Since SIPs involve considerable interaction with the public and individual property owners, many SIPs use a dedicated sound insulation office for ready access to the public. This helps cre- ate a positive public image while providing focused delivery of services. The establishment and carrying cost of these facilities should be considered when developing anticipated cost. D. Professional Fees: Architectural, Engineering, and Acoustical Determining appropriate professional fees is a difficult task given the unique nature of sound insulation programs. Many professional organizations and government agencies provide curves and equations for determining appropriate professional fees associated with construction projects; these curves are usually based on project size and level of complexity. Such standard

Program Cost Development and Funding 205 approaches are not appropriate for SIPs because the level of design and administrative effort on renovation projects in multiple homes is usually greater as a percentage of construction cost than, for example, a large new runway project. Renovation design efforts require the analysis of existing conditions as well as the design of the new treatments. SIP treatments, while generally consistent over a program, are applied in a custom fashion to each home. Additionally, standard cost curves and equations do not reflect the added effort associated with an SIP’s administrative and public relations functions. Professional fees for sound insulation programs are best esti- mated by preparing well-defined scopes and associated effort schedules, reflecting the unique design, administrative, public relations, program-specific facilities, and testing aspects of a pro- gram as described in AC 150/5100-14D, Architectural, Engineering, and Planning Consultant Services for Airport Grant Projects. E. Professional: Construction Related Construction-related professional fees also should not rely on available standard public works methodologies. SIP construction contracts include many third-party individual property own- ers and, in the case of residential SIPs, multiple and geographically diverse construction loca- tions. These realities require more daily coordination and communication with the property owners, as well as making allowances for travel between construction locations. Cost estimation is based on scope/effort estimates and/or experienced consultant advice regarding the level of staffing and services necessary for successful execution of the construction phase. F. Testing A sound insulation program’s acoustical testing guidelines are designed to determine eligibil- ity and confirm compliance with a program’s noise reduction requirements. The knowledge that homes will be tested after construction as part of verifying treatments for FAA funding instills a need for close construction monitoring that ensures construction details are carried out as designed to achieve noise reduction. As contractors new to sound insulation treatments often learn, installation details for acoustical products are more complex than regular installations. These complex construction details need to be built correctly to ensure that the testing results are as needed to meet FAA goals and maintain funding. Reinstalling windows or doors after testing indicates that the installation was not performing properly, which is inconvenient to homeown- ers and awkward for programs. Field representation and other construction monitoring activi- ties that ensure construction is completed as detailed for successful post-testing are beneficial costs to factor into program planning. G. Construction Costs The construction component of a program makes up a majority of overall costs and is there- fore a significant cost component to evaluate. Similar to other components of program costs, tra- ditional means of estimating construction costs are not very accurate. Programs require a blend of construction services and skill sets not typically available in the construction industry, and these are not well represented by traditional estimating practices. Sound insulation programs involve government-funded, large-scale, fast-paced upgrades to buildings as well as specialized acoustical retrofits. These require a blend of project contractor needs that is not usually well supported by the construction community. Contractors experienced in residential construction may possess the retrofit trade skills but lack the administrative and financial sophistication necessary to manage a large, fast-paced, government-financed project. General contractors specializing in large public works may be able to handle the administrative and financial aspects of SIPs but lack the residential construc- tion knowledge and homeowner sensitivity necessary to manage detailed, day-to-day work. So it is a unique blend of public works general contractor sophistication coupled with residential contractor trade skills that is necessary to succeed in sound insulation programs.

206 Guidelines for Airport Sound Insulation Programs Each of these contractor types—public works general contractor and residential contractor— has completely different pricing and overhead structures. The blending of these contractor types results in a hybrid, which traditional construction costing approaches do not support. Accord- ingly, professionals in the sound insulation industry have developed approaches for dealing with this hybrid situation. 11.2.7 Construction Cost Estimating Approaches A variety of construction cost estimating approaches are used by practitioners in the sound insulation industry to establish costs. A few of the most common approaches are summarized in the following: A. Benchmarking Benchmarking is a common approach to estimating construction cost in the sound insulation industry. Under this approach, programs of similar characteristics and components are identi- fied for comparison. Characteristics and component cost information are obtained from those programs, and then compared to the components of the program under development. A pro- gram under development may benchmark against multiple programs in order to obtain compo- nent cost information which is most similar to the anticipated program. When benchmarking, it is common to make adjustments to the data to account for locality, wage rates, construction typology, or differing general conditions. This approach relies on the use of an established sound insulation consultant who would have access to the data. B. Unit Pricing The unit pricing approach is the most common form of sound insulation construction cost estimating. Under this approach, a program’s anticipated construction treatments are broken down into logical unit price items. The unit price items may be broadly defined to include typi- cal units of construction (i.e., add a 2-ton air conditioner) or narrowly defined (i.e., break metal window surround). Unit prices are established from other similar programs (benchmarking) and applied to the anticipated quantities of unit price items for the program under development. Use of benchmarked unit prices relies on access to other programs’ cost data. Unit prices can also be established from detailed estimates or from estimating software such as that provided by RSMeans.18 However, due to the hybrid nature of this specialized industry, estimates are best developed by professionals familiar with the sound insulation industry. Con- struction estimating software often needs to be further programmed with specific sound insula- tion data that are not commercially available. C. Pilot Programs Pilot programs offer an outstanding opportunity for sponsors to determine the actual costs of the various program treatments they are providing. Typically, a pilot program includes the preparation of construction bid documents for a small group of dwellings as an initial phase in a sound insulation program. The bid documents require bidders to provide detailed cost infor- mation (schedule of values), which can be used by the program to establish the anticipated costs for various treatment offerings. The data gleaned from pilot programs can be used to adjust pro- gram treatment options to meet budget goals and to perform a cost–benefit analysis in advance of implementing the full-fledged program. 18 See RSMeans Reed Construction Data website, http://rsmeans.reedconstructiondata.com.

Program Cost Development and Funding 207 D. Contractor Estimates Using local specialty contractors to prepare construction cost estimates for various treatment offerings can also be effective. Under this approach, specifications, details, and plans are prepared for various treatment offerings and submitted to local specialty contractors to estimate. The vari- ous specialty contractor estimates can be combined, general condition costs added, and overhead and profit applied, resulting in an overall estimate of cost. This approach has its limitations based on the market competitiveness of the selected specialty contractors and the ability of the estima- tor to define general condition costs, market overhead, and profit rates. E. Other Estimating Resources Section 5 of Guidelines for Sound Insulation of Residences Exposed to Aircraft Operations19 provides detailed guidance for estimating SIP construction costs and can be used as a resource for the type of costs to be estimated in SIP construction; however, the actual cost data will need to be updated. 11.2.8 Cost Management Once a program’s cost goals and priorities are established, costs can be effectively managed through timely data collection, analysis, and comparison to defined goals or budgets. For effec- tive cost management, preliminary budgets should be prepared for all aspects of the anticipated costs of the program. The preliminary budgets should be adjusted and refined as a program moves from inception to initial construction phase, guided by established priorities and stake- holder interaction. Use cost–benefit analysis when appropriate. Once a program is under way, cost data should be collected for each element of the budget in a timely manner to allow for annual reviews and adjustments per the program’s established goals and priorities. 11.2.9 Best Practice Recommendations: Establishing Costs 1. A proactive approach to developing the importance of costs will pay significant divi- dends should program cost become an issue that attracts public interest. 2. Program sponsors need to consider the many competing elements of a sound insula- tion program to determine the level of importance of each, and then prioritize these in regard to cost. 3. The unique nature of conducting publicly funded environmental remediation on private property does not lend itself well to the use of standard cost estimating prac- tices used for estimating the administrative, professional, and construction costs of typical public works projects. 4. Professional fees for sound insulation programs are best estimated by preparing well- defined scopes and associated effort schedules, reflecting the unique design, adminis- trative, public relations, program-specific facilities, and testing aspects of a program per AC 150/5100-14D. 5. Field representation and other construction monitoring activities that ensure con- struction is completed as detailed for successful post-testing are beneficial costs to factor into program planning. 6. Once a program is under way, cost data should be collected for each element of the budget in a timely manner to allow for annual reviews and adjustments per the pro- gram’s established goals and priorities. 19 Department of the Navy, Naval Facilities Engineering Command, Guidelines for the Sound Insulation of Residences Exposed to Aircraft Operations, as referenced in FAA AC 150/5000-9A, April 2005.

208 Guidelines for Airport Sound Insulation Programs 11.3 Variables Affecting Cost There are many variables that affect the cost of an SIP. Some of the variables that have the greatest impact are discussed in the following. 11.3.1 Regulatory A. Prevailing Wage Rates Publicly funded projects require that the tradespeople who conduct the actual construction work be paid according to regulated wage rates defined by the type or classification of indi- vidual trades (i.e., carpenter, welder). These rates may include federal-, state-, or municipality- established wage rates. The sponsor is responsible for defining which rates apply to a program based on the funding sources. Since multiple funding sources are used in most SIPs, the highest applicable standard will prevail as the required pay rate. Residential prevailing wage rates often apply to programs. However, in the absence of published residential rates, commercial or build- ing rates apply. Prior to bid, the sponsor may request a special determination of residential rates when the standard residential wage rate schedules do not provide for the anticipated trade clas- sifications to be used on a program. Commercial and building prevailing wage rates are typically higher than residential rates and can increase program costs if residential rates are not available at the time of bid. B. Policies and Standard Procedures Once policies and procedures are established and documented in a PPM, they constitute the primary driver of costs for a program. Accordingly, it is critical that a program’s policies and pro- cedures be developed to include projected cost data, which facilitates informed decision making and cost–benefit analysis. To be responsive to evolving cost issues, anticipate updating the PPM throughout the course of the program. C. Acoustical Sampling and Testing Requirements In order for an SIP to be funded with AIP grant funding, the sponsor must follow the sampling and testing criteria specified in FAA PGL 12-09, Attachment A, Table 2.20 Reimbursement for initial and subsequent phase testing is limited to 10% of the residences of a particular type (e.g., brick, wood frame) unless the FAA has approved the sponsor’s written justification for requesting additional testing. The ADO may approve up to 30%. Requests for more than 30% must be approved by FAA Headquarters, Office of Airport Planning and Pro- gramming, Planning and Environmental Division.21 PGL 12-09 does not specify how many (or how few) homes may be considered a “particular type” for testing purposes. Nor is it clear how many (or what percentage) of homes of a given type must meet the interior noise eligibility threshold for that type of home to qualify for acous- tical treatment. Sponsors and consultants have asked the following questions regarding the PGL’s sampling and testing criteria: • How many (or how few) homes can be considered of a “particular type” for testing purposes? • How many types of homes can a program define? • How many (or what percentage) of homes of a given type must meet the interior noise eligibil- ity threshold for that type of home to qualify for acoustical treatment? 20 See note 14. 21 See note 14. Attachment A, §812 (c)(2), Table 2, p. 1-7.

Program Cost Development and Funding 209 Program sponsors and consultants should consult with their local ADO for clarification on these issues. D. Existing Code Deficiencies Many municipal jurisdictions require corrective action if code deficiencies are encountered as part of a significant renovation project. These corrective measures can add significant cost to a program and should be addressed in advance with local municipal code and permit officials. FAA reimbursement under Part 150 NCP programs is limited to code corrections that result as part of the direct installation of SIP treatments and will not cover broader code deficiencies that could become a problem when trying to close a construction permit. Some programs provide local funding to cover limited code issues, usually based on a fixed maximum cost or a defined scope of work. When a program is based on an EIS rather than a Part 150 study, the potential exists for the community to negotiate code corrections as part of the program. E. Environmental Concerns Environmental issues such as removal of lead-based paint, asbestos removal, air quality, and energy efficiency requirements continue to significantly affect program costs. Planning for these costs requires technical knowledge of the age of the buildings to be treated and the potential materials to be encountered. 11.3.2 Community Considerations A. Retrofit Versus Unit/System Replacement Installation of acoustical treatments can be accomplished by retrofitting or by complete replacement of existing installations and systems. Retrofit typically involves a less intrusive and therefore less costly installation using a portion of the existing components of the window, door, HVAC, and electrical system to accomplish installation of the acoustical treatments. On the other hand, unit/system replacement typically involves the complete removal of existing windows and doors to the rough opening and complete removal of existing electrical services and HVAC sys- tems, resulting in increased home disruption and construction costs. Several issues should be considered when determining the type of installation approach. Retrofitting involves a reliance on existing equipment and building components for the retro- fitted installations to function and perform properly. Should the existing equipment or build- ing components be in unsatisfactory condition, improperly installed, or in a state of disrepair or decay, the retrofitted installations may not perform as desired or may result in dissatisfied homeowners. Many programs address the existing condition issue during home evaluations and specify unit/system complete replacement only when needed to address unsatisfactory existing conditions. Another issue to be considered when determining the installation approach is an evaluation of the community’s established renovation norms. These norms can typically be established dur- ing initial assessment of homes for inclusion in an SIP or during a pilot phase. By matching the renovation norms of the community, a program can typically gain broad acceptance of acousti- cal treatment installation methods. B. Treatment Offerings The scope of program acoustical treatment offerings is directly related to program cost. Treatment offerings should be tailored for individual SIPs to meet the noise reduction goals as well as to address community concerns regarding aesthetics and existing architecture. Primary acoustical treatments necessary to meet noise reduction goals, such as window and door installations, typically have an ancillary impact on energy use, interior humidity/moisture control, air quality, ventilation, and the

210 Guidelines for Airport Sound Insulation Programs like. These ancillary noise-treatment–related impacts need to be evaluated and addressed as part of a program as well. C. Scale, Pace, and Consistency The scale, pace, and consistency of bid cycles in a program have a significant impact on pro- gram costs. Typically, the larger the size of construction contracts and more regularly and con- sistently a program awards construction contracts, the lower the per-dwelling unit cost. This is primarily due to the well-understood concept of economy of scale. 11.3.3 Design A. Product Selections The products available to accomplish sound insulation can vary considerably in quality, fea- tures, and price. Accordingly, it is advisable during program formulation that the sponsor be exposed to the full range of available products and features and their related cost implications for the program. A survey of the quality and features of renovation and repair products most often used within the communities to receive sound insulation treatment may assist in selecting products that are commonly acceptable and in accordance with a community’s expectations. 11.3.4 Best Practice Recommendations: Cost Variables 1. The sponsor or the sponsor’s consultant should define which wage rates apply to a program based on the funding sources. Since multiple funding sources are used in most SIPs, the highest applicable standard will prevail as the required pay rate. 2. It is critical that a program’s policies and procedures be developed to include projected cost data, which facilitates informed decision making and cost–benefit analysis. 3. Take into consideration environmental issues such as removal of lead-based paint, asbestos removal, air quality, and energy efficiency requirements, which continue to significantly affect program costs. 4. Understand the established renovation norms active in the community to facilitate cost-appropriate acoustical treatment installation methods.

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TRB’s Airport Cooperative Research Program (ACRP) Report 89: Guidelines for Airport Sound Insulation Programs provides updated guidelines for sound insulation of residential and other noise-sensitive buildings. The report is designed to help airports and others develop and effectively manage aircraft noise insulation projects.

In February 2014 TRB released ACRP Report 105: Guidelines for Ensuring Longevity of Airport Sound Insulation Programs, which complements ACRP Report 89.

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