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Developing a Convincing Benefit- Cost Analysis for Grants Stephen R Reference Materials Developing a Convincing Benefit- Cost Analysis for Grants Stephen R. Galati, CGW, CP APMP November 22, 2013 AGWA Annual Conference This page is intentionally blank. Discussion Agenda . What is a BCA? . Why is a BCA Important? . Case Study . MBTA Drawbridge Grant BCA . Grant Project Conditions (Obstacles, Timeframe, resource Restraints, etc.) . What Discussions Should a BCA Contain? . Case Study Reprise . Visualizing the Project . Understanding who will be impacted by the Project . Conducting the Data Collection and Analysis . Doing the Math… . Understanding and Calculating Present Value, Net Present Value, Discounts, and the Benefit-Cost Ratios . Wrapping Everything Up with a Persuasive Bow . Conclusion: So did we Win the MBTA Drawbridge Grant? . Further Reading and Resources 2 Stephen R. Galati, CGW, CP APMP Presenter Bio . Author of “Geographic Information Systems Demystified” published by Artech House http://www.artechhouse.com/Main/Books/Geographic-Information-Systems-Demystified- 883.aspx . An Excerpt from “Starscraper” - Engineering News Record magazine’s Imagining the Future – Construction Science Fiction Collection http://enr.construction.com/opinions/viewpoint/2013/1104-Construction-Science-Fiction- Starcraper-An-Excerpt.asp . Author of “Understanding Cyber Security and How it Affects Federal Grant Writing” in the August 2013 issue of FUNDED http://grantsoffice.com/Portals/0/funded/issues/FUNDEDAug2013.pdf . Author of “Exploring the UASI Nonprofit Security Grant Program” in the December 2011 issue of FUNDED http://grantsoffice.com/Portals/0/funded/issues/FUNDEDDec2011.pdf 3 Stephen R. Galati, CGW, CP APMP Stephen Galati is the Manager of National Proposals with TRC Environmental Corporation working out of Augusta, Maine. He has 20 years of proposal management, technical writing, grant writing, marketing communications, training and course development, and electrical engineering experience throughout the United States and for global opportunities. He is the author of Geographic Information Systems Demystified, a textbook published by Artech House, and has numerous publications to his credit concerning environmental consulting, proposal writing, grant management, and public / private funding. He is currently finishing his Doctorate Degree in Management with the University of Phoenix, and holds a Master’s Degree in English Rhetoric from the City University of New York, a Bachelor’s Degree in Electrical Engineering from Pratt Institute, an Associate’s Degree in Liberal Arts and Science from the City University of New York, and Presenter a Professional Development Certificate in Emergency Management from the FEMA Institute. He currently holds two Field of Interest Chairs for the American Grant30% Writers Association covering the Environment and Homeland Security, and is a Chemical- Terrorism Vulnerability Information (CVI) Authorized User. of total NSR An excerpt from his short story “Starscraper” was recently selected for inclusion in Engineering News Record magazine’s Imagining the Future – Construction Science Fiction Collection. 4 Resources and BCA Examples . Further Reading . Resources . Available BCA Examples 5 Further Reading and Resources White House – OMB Circular A-94 http://www.whitehouse.gov/omb/circulars_a094#1 FEMA Benefit Cost Analysis Reference Guide http://www.fema.gov/media-library/assets/documents/22970?id=4830 FEMA Benefit-Cost Analysis Tool http://www.fema.gov/benefit-cost-analysis US DOT - TIGER Benefit-Cost Analysis Resource Guide http://www.dot.gov/sites/dot.dev/files/docs/USDOT%20BCA%20Guidance.pdf Resources TCRP Report 78: Estimating the Benefits and Costs of Public Transit Projects: A Guide for Practitioners 30% http://onlinepubs.trb.org/onlinepubs/tcrp/tcrp78/guidebook/tcrp78.pdf of total NSR 6 Further Reading and Resources (continued) Pricing the Priceless: Cost Benefit Analysis of Environmental Protection http://ase.tufts.edu/gdae/publications/c-b%20pamphlet%20final.pdf McPherson, E. G., Simpson, J. R., Peper,P. J., & Xiao, Q. (1999). Benefit-cost analysis of Modesto’s municipal urban forest. Journal of Arboriculture, 25(5), 235-248. Retrieved from http://www.fs.fed.us/psw/programs/uesd/uep/products/cufr_36_Modesto%20JOA. pdf Milan School Cost Benefit Analysis of Investment Projects (European) http://www.csilmilano.com/Summer-School/downlds/guide2008_en.pdf Resources San José State University, Department of Economics – An Introduction to Cost Benefit Analysis. 30% http://www.sjsu.edu/faculty/watkins/cba.htm of total NSR 7 Available BCA Examples Lawrence, S., & Mears, D. P. (2004). Benefit-cost analysis of supermax prisons: Critical steps and considerations. Urban Institute – Justice Policy Center. Retrieved from http://www.urban.org/UploadedPDF/411047_Supermax.pdf Neponset River Greenway Corridor – Completion Project TIGER Application http://www.env.state.ma.us/Neponset_River_Greenway_Corridor/Documents/NepCorApp.pdf Wilson, B. M. (2013). Benefit cost analysis: Boise Foothills open space conservation serial levy. Marylhurst University. Retrieved from http://www.idahoconservation.org/issues/land/foothills-protection-bca-boise Examples City of Hartford, CT – Hartford’s Intermodal Triangle Project TIGER IV Application http://planning.hartford.gov/Oneplan/Transit%20Center/TIGER%20IV/Appendix.pdf Benefit-Cost Analysis Port Canaveral Cargo Berth Expansion, TIGER IV Grant Application BCA http://portcanaveral.com/tigerIV/pdf/Port%20Canaveral%20Benefits%20Cost%20Analysis%2030% TIGER%204.pdf USDOT - TIGER Benefit-Cost Analysis Examples of total NSR http://www.dot.gov/sites/dot.dev/files/docs/TIGER-bca-examples-03-06-12.pdf 8 Case Study - Benefit Cost Analysis Massachusetts Bay Transportation Authority (MBTA) Annisquam Railroad Drawbridge Project 9 Benefit Cost Analysis The Benefit Cost Analysis looks at the Annisquam River drawbridge project from the standpoint of society as a whole, and accounts for the net benefits and net costs based on the criteria described in the TIGER IV Grant Notice of Funding Availability. The analysis seeks to answer the question, “Is society better off with the project or without the project?” The analysis addresses travel time savings, operating and maintenance costs and savings, emission reduction, and economic development. Benefit Cost Ratios have been estimated on an annual basis for 30 years, beginning in 2012 and discounted to present value at the alternative rates of 3% and 7%. Future dollar values were also adjusted for projected inflation at a rate of 2.0% per annum. The proposed project has a Benefit Cost Ratio of 12.5 and 18.8 based upon discount rates of 7% and 3%. The full analysis can be found in Attachment #1: Benefit Cost Ratio Analysis, a spreadsheet supplement to this application. A summary of the results of this analysis follows indicating the benefit cost ratio and monetized values for both discounted rates on the project. MBTA Tiger Grant 30 Year Benefit Grant Selection Criteria Discount Rate Discount Rate Net Present Value (NPV) 7% 3% Travel Time Savings State of Good Repair $38.7 million $40.3 million Saved Revenue for State of Good Repair, $5.0 million $5.2 million Maintained Ridership Sustainability Layover Facility State of Good Repair, $12.0 million $12.5 million Construction Savings Livability Retained Tourism and Sustainability, Livability $1.4 billion $1.5 billion Tax Revenue Emissions Savings Sustainability, Livability $0.7 million $0.7 million Total Benefits $1.5 billion $1.5 billion NPV of Total Benefits $581.1 million $976.9 MBTA Tiger IV Grant $25,140,000 MBTA Matching Fund $16,760,000 Benefit Cost Ratio 12.5 18.8 Costs Project Costs Total project costs to replace the existing Annisquam River drawbridge are as follows: Total Estimated Project Costs: $41,900,000 Bridge Design $2,500,000 Construction Costs $31,100,000 Inspections $2,500,000 Force Account $2,000,000 Contingency $3,800,000 It is anticipated that this project will be funded through 60% TIGER IV funding ($25.14 million) and 40% MBTA matching fund ($16.76 million). State of Good Repair The existing bridge was built in 1911 and is located on the MBTA Newburyport/Rockport commuter line approximately 400 feet west of Gloucester station. It is 73 feet 10 inches ± long with a fixed steel stringer span and Strauss trunnion bascule span that incorporates a fixed steel stringer span. The skew at each abutment is 0°. The fixed span is 27 feet and consists of stringers and steel framing that supports the main trunnion (on which the bascule leaf rotates). The bascule leaf is 46 feet 10 inches. Each span carries two MBTA commuter rail tracks. To the west of the bridge is a 2,200 foot causeway, while to the east of the bridge is an approximately 140 foot long timber trestle. There are two tracks used for the commuter rail. The tracks switch to single track about a quarter mile east of the bascule, before Gloucester commuter rail station. Due to the age of the bridge, ongoing maintenance and operations costs are significant. Bridge safety is also a major concern since it is ranked in a 2010 inspection report as the worst physically in the MBTA commuter rail system. The annual average maintenance and operations costs amount to $550,200 per year for personnel, repairs, and materials. If the bridge were closed these costs are avoided. According to MBTA’s design and inspection consultant, the existing bridge is in need of a complete structural overhaul and would need to be closed within 2 years. The existing bridge has a bascule span to allow for boat traffic. Navigability
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