2006 Final Guidance on New Starts Policies and Procedures

[2006 Final Guidance on New Starts Policies and Procedures as a Word Document.]

May 16, 2006

Prepared by:
Federal Transit Administration
Office of Planning and Environment
US Department of Transportation

Table of Contents

Section Page
 Purpose

1

 Improvements to Project Development and Program Management of New Starts Projects

2

 1 NEPA Interfaces

4

 2 Preservation of Information for Before and After Study

7

 3 Certification of Technical Methods, Planning Assumptions, and Project Development Procedures

8

 4 New Starts Funding Level Set at Final Design Approval

8

 5 Cost Effectiveness Breakpoints

10

 6 Contractor Performance Assessment Report

11

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Purpose

Section 301 1 (d)(6) of the new transportation statute, the Safe, Accountable, Flexible, Efficient Transportation Equity Act - A Legacy for Users (SAFETEA-LU), requires that the Federal Transit Administration (FTA) publish, for comment and response, “Policy Guidance” regarding the new fixed guideway capital project review and evaluation process and criteria at the following times: (1) 180 days after the enactment of SAFETEA-LU, (2) each time significant changes are made to the process and criteria, and (3) at least every two years. This document is FTA’s response to requirement (1) above and represents our initial publication of the New Starts Policy Guidance.

This guidance was initially issued for comment on January 19,2006. The guidance explained proposed changes to the New Starts program which were proposed to become effective April 30, 2006, as well as longer-term changes to the New Starts program that FTA plans to be the subject of rulemaking in the future. Rather than April 30, 2006, these changes are effective immediately upon publication in the Federal Register of the Notice of Availability of the Policy Guidance. FTA requested - and received - comments on both aspects of the guidance in the January notice. Based on these comments, the guidance was revised to respond to industry concerns. A summary
of comments received, as well as FTA’s response to those comments, is included in the Federal Register Notice of Availability, published May 16, 2006. The immediate changes discussed in detail below apply to all New Starts submittals received after the date of this guidance and will be effective until future policy guidance or a new rule is released.

FTA will also publish a new Rule for Major Capital Investment Projects (New Starts) in response to changes specified in SAFETEA-LU to the methods, criteria and procedures used to evaluate and rate projects proposed for funding under FTA’s New Starts program. These provisions of SAFETEA-LU may lead to some changes in the way that FTA determines eligibility for funding, the framework for evaluating and rating projects, and the procedures used to plan and develop new transit capital projects that seek New Starts funds.

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Improvements to Project Development and Program Management of New Starts Projects

The current framework and methodology for evaluating and rating New Starts projects, and the decision rules that support it, remain unchanged. All of the measures and their weights for developing New Starts ratings and recommendations remain consistent with the process spelled out in the Major Capital Investment Projects Final Rule issued in December 2000. The May 2006 Reporting Instructions for the Section 5309 New Starts Criteria, and the FY 2008 Evaluation and Rating Process issued along with this Policy Guidance, are the same as the FY2007 Reporting Instructions and Evaluation and Rating Process, except where noted in the Notice of Availability. Furthermore, it should be noted that the FY 2008 FTA New Starts Evaluation and Rating Process continues to reflect two changes established in SAFETEA-LU, which were previously implemented through the FY2007 Evaluation and Rating Process. Specifically, SAFETEA-LU replaces a three-point rating scale with a five-point scale, with the overall project rating designations of “Highly Recommended,” “Recommended,” and “Not Recommended” replaced with “low,” “medium-low,” “medium,” “medium-high,” and “high.” In addition, SAFETEA-LU, while continuing to require that a project’s overmatch be evaluated, adds a clause that nothing in the Act shall be construed as authorizing the Secretary to require a non-Federal financial commitment for a project that is more than 20 percent of the net capital project cost.

While the evaluation and rating framework will not change prior to the publication in the Federal Register of a final rulemaking, FTA is implementing various procedural changes meant to improve the management of the New Starts process and to ensure the accuracy and consistency of the information submitted to FTA as part of the New Starts evaluation and rating process. These improvements are presented in the following sections.

The amendments made by SAFETEA-LU to section 5309(d) continue to require FTA to determine that projects proposed for New Starts funds meet a variety of criteria, including that they are the result of an alternatives analysis, are included in an approved transportation plan, that the applicant has the legal, financial and technical capability to carry out the project, that the project is justified based on a review of the criteria specified in the law, and that the project is likely to continue to meet these requirements in the future, before projects are allowed to begin preliminary engineering as well as final design. Guidance on Advancing Major Transit Investments through Planning and Project Development is found at Advancing Major Transit Investments through Planning and Project Development.

Pursuant to these requirements and prior to submitting a request to enter into preliminary engineering, candidate New Starts project sponsors must complete a planning alternatives analysis, which evaluates a range of transportation alternatives developed to meet locally identified transportation problems in a given corridor. The objective of the planning alternatives analysis is the development of reliable estimates of the costs, impacts, and benefits of these alternatives sufficient to make an informed decision on the mode and general alignment of the preferred alternative. The planning alternatives analysis should further result in the development of measures of the proposed New Starts project’s justification and financial commitment, which will support the subsequent request to enter into preliminary engineering.

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It is FTA’s desire to work closely with New Starts project sponsors during the planning alternatives analysis to ensure that it results in the development of reliable information to support both the local decision on selection of a preferred alternative and FTA’s decision to admit the preferred alternative into preliminary engineering. FTA therefore strongly encourages that the project sponsor submit the following study products as they ;are developed during the alternatives analysis study to facilitate FTA review of a subsequent request to enter into preliminary engineering:

Before FTA can consider a preliminary engineering request, the project sponsor must:

FTA will conduct a review of the products of the planning alternatives analysis, including the estimates of project costs and benefits of the preferred alternative and the baseline alternative used to calculate the New Starts project justification criteria, to ensure that the information is reliable and is sufficient to support a decision to enter into preliminary engineering . FTA may utilize its oversight resources to facilitate such reviews. Project sponsors should coordinate closely with FTA and its consultants in these reviews to ensure the timely advancement of candidate New Starts projects into preliminary engineering.

Before approving entry into final design, FTA requires that the project design and cost estimates be solidified as described in Section 4, that all National Environmental Policy Act (NEPA) requirements be completed, that the majority of proposed non-New Starts funds be committed, and that the project maintain satisfactory ratings against the New Starts evaluation criteria. FTA and its oversight resources will review the products of preliminary engineering to minimize and manage risk in the project’s estimate of costs and benefits, and in the sponsor’s capability to finalize the design and construction of the project. As described in Section 4, FTA’s expectations for products of New Starts preliminary engineering may differ from preliminary engineering as that term is used for other FTA programs.

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Recently, a number of projects have either failed to advance through project development or have changed a great deal in cost and scope from the projects that were initially chosen as the locally preferred alternative that was approved to enter into New Starts preliminary engineering. This has led FTA to consider a variety of ways to ensure that the project is: 1) actually ready to advance into project development, and 2) likely to succeed during project development, prior to approval of entry into preliminary engineering and final design. The following sections describe procedural changes that FTA will apply to projects seeking to enter into New Starts preliminary engineering or final design after the date of this guidance and includes a discussion of the basis for these changes.

1 NEPA Interfaces

FTA has a strong interest in improving the linkage between the New Starts and NEPA project development processes and requirements. Specifically, FTA seeks to mitigate conflicts between NEPA and New Starts; to improve the consistency and reliability of the information developed for both NEPA and New Starts purposes; and to ensure the use and disclosure of such information for local and Federal decision-making. To achieve these goals, FTA is implementing the following procedural changes related to the NEPA interface with the New Starts project development process.

Require a project to have progressed beyond the NEPA scoping phase before entering into New Starts preliminary engineering.

While FTA does not now mandate that project sponsors combine the planning alternatives analysis process with the NEPA process, the failure to perform some tasks related to the NEPA process has the potential to disrupt project development. Scoping is a requirement of the NEPA process focused on determining the range of alternatives to be addressed in NEPA documents and for identifying significant issues related to a proposed Federal action.

A Council on Environmental Quality (CEQ) memo dated April 30, 1981 regarding scoping guidance outlined the following scoping objectives:

In addition, SAFETEA-LU Section 6002 requires that, as early as practicable during the NEPA review, the project sponsor provide an opportunity for involvement by the public and other interested agencies in determining the range of alternatives to be considered.

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FTA has found that when proposed New Starts projects enter into New Starts preliminary engineering before NEPA scoping has been completed, other reasonable alternatives have occasionally been introduced during New Starts preliminary engineering. This introduction of major new alternatives occurred because many of the NEPA scoping participants had not previously been involved in developing the alternatives that were evaluated in the alternatives analysis. FTA recognizes that CEQ regulations require consideration of “reasonable alternatives” introduced at any point in the NEPA process. However, by requiring that NEPA scoping, including the related requirements of SAFETEA-LU Section 6002, be completed prior to FTA approval to initiate New Starts preliminary engineering, FTA hopes to foster earlier interaction and, ideally, general consensus among the scoping participants about the alternatives to be considered during NEPA review. Through this requirement, FTA expects to produce more efficient and mutually-supporting NEPA and New Starts reviews, which share a similar objective - informed decision-making.

Therefore, FTA requires projects to have progressed beyond the NEPA scoping phase before it will approve entry into New Starts preliminary engineering. This requirement could be satisfied in a number of ways: (1) A Draft EIS can be completed as part of the planning alternatives analysis process. (2) In the case where the Draft EIS is being prepared during the New Starts PE, after any NEPA scoping meetings and other NEPA scoping activities, project sponsors can submit, for FTA review, a scoping report that identifies the range of alternatives and major issues that are proposed to be addressed in the EIS. The scoping report would also include a discussion of the alternatives that have been proposed and the reasons for retaining or eliminating each of those alternatives. ( 3 ) In the case of an environmental assessment, after early coordination with interested parties, the project sponsor would submit, for FTA review, a report or technical memorandum which identifies the alternatives to be the sub-ject of the NEPA review. (4) In the rare instance when a proposed New Starts project is categorically excluded from NEPA review, project sponsors would submit appropriate documentation to support that class-of-action determination.

Accordingly, FTA will require that project sponsors submit the results of the NEPA Scoping process, as discussed above, as part of the information submitted to FTA for requests to enter into News Starts PE. FTA recognizes that when the Draft EIS is being prepared as part of the New Starts PE process, the scoping process can take 3 to 4 months to complete. Project sponsors should build this step into the schedule, recognizing that scoping can occur while FTA is reviewing the ridership, cost, and financial information that support the request to enter into New Starts PE. Sponsors who are contemplating a request to enter into New Starts PE in the next few months should contact FTA immediately about beginning the scoping process.

Require the Final EIS to present the New Starts evaluation of the preferred alternative as part of the NEPA evaluation of the alternatives.

According to CEQ’s NEPA regulations (40 CFR 1502.14), an EIS should present the merits and environmental impacts of the alternatives in comparative form, “thus sharply defining the issues and providing a clear basis for choice among options by the decision maker and the public.” In the transportation context, the NEPA evaluation typically measures the merits of an alternative by the extent to which the project’s purpose and need and other established objectives are met.

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These merits are arrayed against the adverse impacts and other costs of each alternative to facilitate decision-making among the available alternatives.

The CEQ regulations (40 CFR 1502.23) further require that “an environmental impact statement should at least indicate those considerations, including factors not related to environmental quality, which are likely to be relevant and important to a decision.” For a New Starts project, the New Starts rating information qualifies as “relevant and important to a decision.” Therefore FTA requires that, as part of the NEPA evaluation of the alternatives, a NEPA document include information relating to the New Starts evaluation. FTA recognizes that, for a draft EIS or EA, the New Starts evaluation information may not be available when the draft NEPA document is published, but if it is available, it must be included. For a Final EIS, the New Starts evaluation information must be included in the document.

This policy will ensure that, through the NEPA document, the affected public and interested agencies are fully informed about the proposed New Starts project, including the factors that, under Federal transit law, FTA must consider in evaluating those projects.

For NEPA documents prepared during alternatives analysis and before a project has been approved for entry into New Starts PE, FTA will require that information relating to the New Starts criteria be presented along with a brief description of how the information is used for FTA’s ratings. For projects that have received an FTA rating, the actual rating would also be presented. This policy applies specifically to the locally preferred alternative (i.e. the proposed New Starts project); however, in cases where the DEIS constitutes the alternatives analysis phase of project development, FTA strongly encourages (but will not require) that information in support of the criteria be developed for all studied alternatives, as a means of enhancing local stakeholders’ understanding of the potential competitiveness of the alternatives for New Starts funding. In addition, FTA clarifies that the requirement to include information on FTA’s rating process and to include the latest available New Starts rating applies to all NEPA documents, which could include environmental assessments (EAs) in addition to environmental impact statements (EISs). FTA has prepared standard language that would accompany the New Starts rating to provide context for the New Starts rating and process. An example of standard language is available from the Office of Planning and Environment.

For projects with a New Starts rating of less than “medium,” require the environmental decision document to include a statement as to how the New Starts process may affect the ability of the project to advance to implementation.

Over the past several years, a number of projects that were rated lower than “medium” against the New Starts criteria experienced scope changes after the publication of a Final EIS and environmental Record of Decision (ROD). The scope changes were necessary to reduce the project cost and achieve an acceptable New Starts rating. The scope changes also necessitated supplemental NEPA documents and re-evaluations. In some cases, the project that was presented to the public in detail in the Final EIS was subsequently altered substantially in order to improve the cost-effectiveness rating.

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Therefore, in cases where FTA has determined that a supplemental NEPA document will be required in order to advance the project into final design, FTA will not issue a FONSI, FEIS or ROD until the supplemental document is completed. This policy will help ensure that the environmental documents present the affected public with an accurate description of a project that is acceptable for FTA New Starts funding.

When FTA has determined that a supplemental environmental document will not be required and a proposed project has received a New Starts rating of less than “medium,” FTA will issue the FEIS or ROD, but include a statement in the document as to how the New Starts process may affect the ability of the project to receive New Starts funds. This approach allows the environmental process to be completed and allows the project sponsor to begin land acquisition with its own funds. At the same time it puts the public as well as local decision-makers on notice of the possibility that the project may not ultimately receive New Starts funding. An example of standard language for this statement is available from the FTA Office of Planning and Environment.

2 Preservation of Information for Before and After Study

In the December, 2000 Final Rule on Major Capital Investment Projects, FTA required that project sponsors seeking full funding grant agreements (FFGA) submit to FTA, before approval to enter into an FFGA, a complete plan for the collection and analysis of information to identify the impacts of their projects and the accuracy of the forecasts prepared during project planning and development. SAFETEA-LU amended section 5309(g)i(2)(c) to codify this regulatory requirement and now requires that project sponsors, as a condition of receiving a FFGA, assemble information on five key project characteristics generated during project planning and development: (1) project scope; (2) transit service levels; (3) capital costs; (4) operating and maintenance costs; and (5) ridership patterns and revenues. SAFETEA-LU now requires FTA to use this information in preparing an annual report to Congress on the results of any before and after studies completed during that year.

FTA’s regulation requires this information at the point of entry into New Starts preliminary engineering, entry into final design, before the award of an FFGA, and two years after opening to revenue service. To ensure that information that will be required to complete the before and after study is identified and preserved during project planning and development, FTA now requires project sponsors to provide initial documentation of the information produced during alternatives analysis when they apply to enter into New Starts preliminary engineering, and to provide updated information and an analysis of any changes from the previous phase of project development, when applying to enter into final design and before receiving an FFGA. The purpose of this requirement is to ensure that the information is preserved and will be available to be analyzed in the forthcoming before and after study. This documentation is similar to information already used to support a request to enter into New Starts preliminary engineering, and thus should not represent a significant burden on project sponsors.

The SAFETEA-LU amendment to section 5309(1)(2) now requires that FTA publish an annual report that analyzes the consistency and accuracy of cost and ridership forecasts prepared by

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each contractor to New Starts project sponsors. To help FTA fulfill this new responsibility, we require, as part of the before and after submissions, that each( New Starts project sponsor identify the contractor responsible for the capital and operating cost estimates and ridership forecasts and include a description of the contractor’s role and responsibilities in developing these forecasts. Preliminary guidance on before and after studies and a model before and after study plan are currently available from the FTA Office of Planning and Environment. FTA is currently updating this guidance to reflect SAFETEA-LU requirements.

3 Certification of Technical Methods, Planning Assumptions,and Project Development Procedures

SAFETEA-LU emphasizes the need for reliable ridership forecasts and cost estimates in a number of ways. First, reliability of forecasting methods has been explicitly included as an evaluation criterion (section 301 1 (d)(2)(B)). Second, FTA is now required to track contractor performance and annually report to Congress on the consistency and accuracy of the cost estimates and ridership forecasts produced by each contractor to public transit agencies developing New Starts projects (section 5309(1)(2) as amended).

The information submitted to FTA during the New Starts evaluation and rating process must use consistent and defensible measures, reliable data, and analytical assumptions consistent with best practices and FTA’s requirements. Accordingly, as part of its existing New Starts evaluation procedures, FTA has asked project sponsors to include with their New Starts preliminary engineering or final design request, as well as the annual New Starts submissions, a statement certifying that the technical approaches and assumptions used in the analysis were in accordance with FTA guidance and best professional practices. FTA has required that the sponsoring agency’s Chief Executive Officer (CEO) sign the certification statement included in the New Starts templates.

In order to ensure that all relevant assumptions, consistent with FTA guidance, are used in developing New Starts information, FTA has enhanced the CEO’s certification to include all key assumptions that must be followed in developing the New Starts information. The revised certification can be found in the Reporting Instructions for FY 2008 New Starts submittals. This certification will continue to be signed only by the project sponsor’s CEO.

4 New Starts Funding Level Set at Final Design Approval

Projects that enter into final design are those projects that FTA and the project sponsor agree are meritorious and will very likely be built. In order to support this determination and the decision to move forward with the proposed project, the products of New Starts preliminary engineering should include a final project scope, a highly accurate cost estimate, and a solid financial plan with a substantial portion of the proposed local funding committed. Furthermore, SAFETEA-LU contains several sections that indicate Congress’s keen interest in minimizing cost increases between stages of project development. These sections include: 1) the amendment to section

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5309(h)(3) which allows FTA to provide a higher New Starts share than requested for projects with costs and ridership forecasts that do not change much from alternatives analysis to just before completing a FFGA; 2) inclusion of the reliability of forecasting methods as an evaluation criteria in section 5309(d)(2)(B) as amended; and 3) a requirement that FTA report to Congress on the accuracy of ridership forecasts and costs for all New Start projects, both in before and after studies and in contractor performance reports as stated in section 5309(1) as amended. If the information generated in New Starts preliminary engineering is to be reliable as the basis for decision-making for proposed New Starts projects, the final New Starts preliminary engineering cost estimate and financial plan should have very little likelihood of changing significantly in final design. Therefore, FTA will place a cap on the FFGA New Starts funding amount at the point of approval to enter into final design.

All refinements to project scope and alignment should be finalized and major project uncertainties assessed during the New Starts preliminary engineering phase of the New Starts process. This approach will, in many instances, require a different perspective on the work performed and eligible costs for federal reimbursement than has traditionally been associated with the term “preliminary engineering.” For example, varying definitions of preliminary engineering, such as “the engineering necessary to complete NEPA,” or “30% design” would be supplanted-for New Starts projects-by an expectation that the New Starts preliminary engineering phase will result in project scope and cost estimates and financial plans that have little, if any, need for change after approval of the project into final design. To clarify the distinct nature of the activities that must be completed prior to entry into final design, FTA will refer to this stage of project development as “New Starts Preliminary Engineering.”

Once the project is approved into final design, any increase in project costs will be borne by the sponsoring agency and its non-section 5309 New Starts funding partners, except in limited circumstances addressed below. In any case, cost increases after entry into final design must not be so large as to jeopardize the project’s cost-effectiveness. Under this approach, it will be in the project sponsors’ best interest to estimate costs reliably and conservatively in New Starts preliminary engineering since any cost increase later in project development is the sole responsibility of the project sponsor. At the same time, FTA (does not want to create a disincentive for project sponsors to apply value-engineering techniques or otherwise identify legitimate cost reductions during final design. As with increases in costs beyond the grantee’s control, FTA would expect to share proportionally in the benefit of those cost reductions.

FTA will entertain requests for higher levels of New Starts funding when, during final design but prior to execution of the FFGA, FTA determines that the increase in costs is beyond the grantee’s control. These cost increases are expected to be limited to unforeseen inflationary increases due to unusual occurrences (i.e. Hurricane Katrina, large commodity market fluctuations such as steel and concrete, etc.) FTA will decide on a case by case basis whether these circumstances apply to a given project and what dollar amount is attributable to these occurrences. FTA would participate in these cost increases proportionate to the previously agreed to percentage share between FTA and the project sponsor.

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In addition, once the project has been approved for entry into final design, the project would not be subject to any changes in New Starts policy, guidance, and procedures. By adopting this policy, FTA is creating a process that provides more stability for grantees at this phase while allowing FTA to proceed with desired policy/guidance changes without having to account for any negative impact on existing projects that are far along in the development process. It should be noted that this policy would not exempt a project from new statutory or regulatory guidelines, as it is outside FTA’s authority to do so.

Finally, FTA is developing “exit criteria” which will define in greater detail the conditions that must be met at the completion of New Starts preliminary engineering. FTA believes that the “exit criteria” will help in clarifying when a New Starts project is ready to move from one step to the next.

5 Cost Effectiveness Breakpoints

In response to concerns that the breakpoints used for cost effectiveness ratings were dated, FTA announced that it would annually make adjustments to the breakpoints in its Dear Colleague letter of April 29, 2005. That letter also stated that the breakpoints would be adjusted using the Gross Domestic Product (GDP) price deflator. The revised breakpoints are included in the updated Reporting Instructions for Section 5309 Criteria and listed below. In order to understand how the breakpoints are changed, it is important to know how the breakpoints are established, which is described below.

The breakpoints that FTA uses to assign cost-effectiveness ratings are based, fundamentally, on the value of the project’s benefits (cost per hour of transportation system user benefits with an adjustment to account for congestion benefits and all other unquantifiable benefits). The value of time savings is both well developed and widely used in the economic analysis of transportation projects. This issue was addressed in standing US Department of Transportation (DOT) guidance (Departmental Guidance for the Valuation of Travel time in Economic Analysis, April 9, 1997). This guidance describes, in detail, the derivation of the standard values of time to be used by all USDOT Administrations in the economic evaluation of proposed projects.

Consistent with this guidance, FTA values travel time-savings at 50 percent of Median Household Income published by the Census Bureau, divided by 2,000 hours.

When the breakpoints were initially established, the most recent data available was from the year 2000. At that time, the median household income of $42,148 was reported by the U.S. Census and using 2000 hours per year as specified in the departmental guidance, the value of time in year 2000 was calculated at $10.54 per hour. However, time savings for transit users alone does not capture the full range of benefits of major transit projects. Pending improved reliability of the estimates of highway congestion relief, FTA assumes that congestion relief adds about 20% to the travel time savings generated by the project. Hence, each hour of transit time savings would represent a total direct benefit of about $12.65 per hour in year 2000 dollars to all users of the transportation system. Further, indirect benefits (economic development, safety improvements, pollutant reductions, energy savings, etc.) increase that value. Assuming that indirect benefits are approximately equal to the direct transportation benefits, FTA increases the

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value of each hour of transit travel time by a factor of two to about $25 in year 2000 dollars. FTA uses this value to establish the breakpoint between "low" and "medium-low" for cost effectiveness.

In 2005 and now again in 2006, FTA has used the GDP deflator to adjust the breakpoints. The new breakpoints are:

 High  $11.49 and under
 Medium-High  $11.50 - $14.99
 Medium  $15.00 - $22.99
 Medium-Low  $23.00 - $28.99
 Low  $29.00 and over

6 Contractor Performance Assessment Report

SAFETEA-LU requires the Secretary to submit to congressional committees a report analyzing the consistency and accuracy of costs and ridership estimates made by each contractor to public transportation agencies developing new fixed guideway projects. The report must compare the cost and ridership estimates made when projects are approved to enter into New Starts preliminary engineering with those made when the project is approved to enter into final design, and the cost and ridership at the commencement of revenue operations and when the project has been operating for two years. In making the comparisons, the Secretary shall consider those factors having an impact on costs and ridership outside the control of the contractor.

Similar to other provisions in SAFETEA-LU, the report is intended to encourage better forecasts of costs and ridership to inform decision-makers when a locally preferred alternative (LPA) is chosen. Having the most accurate information at that time reduces the likelihood that ridership and cost estimates will change significantly during project development, so that the locally preferred alternative’s worthiness over other alternatives cannot be questioned.

FTA will begin tracking the performance of contractors for all projects that are approved for enter into New Start preliminary engineering after publication of this guidance. Information on the contractor’s area of responsibility for the forecasts will be required along with explanations or analysis of uncertainties. As discussed in the federal register notice announcing this policy guidance, FTA does not require but strongly encourages descriptions of the uncertainties inherent in costs and ridership whenever they are reported to FTA or in any other document. The uncertainty analysis describes how costs and ridership could change given the reliability of methods in predicting the project’s scope or travel markets effected, or should external events depart from what was assumed. If such an analysis is available, it will be taken into consideration by FTA in its assessment. For example, if an analysis described cost or ridership changes that could occur under different conditions than those assumed, and these changed conditions occur with an effect close to that predicted, FTA would give positive consideration to the contractor’s performance. FTA plans to provide guidance in the future for reporting uncertainties in cost and ridership forecasts, but it is in the interest of contractors to perform their own analysis now when forecasts are produced.

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While it is not the intent of this report to assess the performance of other entities (e.g. metropolitan planning organizations, or transit agencies) responsible for forecasts, as part of the information collected on contractor responsibilities, FTA will require that the responsibilities of these other entities be identified in the same format as that fix contractors in order to better assess the context of the contractor’s involvement. The reporting format for this information can be obtained from FTA’s Office of Planning and Environment.

FTA will use information from project sponsors and contractors, and FTA oversight contractors, to make the assessments for the report. FTA intends to assess the performance of contractors in relation to the specific project for which they have been contracted to support. FTA does not intend to produce an overall assessment of contractors for all the projects on which they have worked.

May 16, 2006. This guidance describes some procedural changes that FTA began to apply to projects seeking to enter into New Starts preliminary engineering or final design after May 16, 2006, and includes a discussion of the basis for the changes. For additional information on New Starts policies that are developed through the rulemaking process, please visit the New Starts Statutes, Policies and Regulations section.