IFTWG Overview Project Selection and  Cost Benefit Analysis Michael P. Onder, Team Leader Office of Freight Management and...
IFTWG Historical Summary: 1998 Formed by joint recommendation Industry, government, military, vendors 1999 2004 2005 Chart...
Working Group Philosophy: <ul><li>The IFTWG is a Forum : </li></ul><ul><li>For key members of the stakeholder community to...
Stakeholders: <ul><li>Industry </li></ul><ul><ul><li>Members :  Union Pacific Railroad, American Presidents Line, Hanjin S...
Methods and Tools: <ul><li>Open discussions </li></ul><ul><ul><li>Sharing of concerns and priorities </li></ul></ul><ul><u...
Project Selection
IFTWG Analysis Tools Business Process Mapping <ul><li>“ AS IS ”  Business Processes captured in the supply chain relative ...
 
IFTWG Analysis Tools Cost Benefit Methodology “ AS IS ”  Metrics <ul><li>Qualitative  – Industry Standard Performance Metr...
Cost Benefit Methodology  “ AS IS ”  Metrics Qualitative Performance Measure Qualitative Performance Measure Selected
Cost Benefit Methodology  “ AS IS ”  Metrics Processes Selected Processes Selected and Associated with Qualitative Perform...
Cost Benefit Methodology  “ AS IS ”  Metrics Quantitative Cost Drivers Quantitative Cost Driver associated with Business P...
IFTWG Analysis Tools Cost Benefit Methodology “ TO BE ”  Design <ul><li>Expert Panel Evaluation of “TO BE” Project with Te...
Cost Benefit Methodology  “ TO BE ”  Design Qualitative Performance Measure Potential Technology Rated by Qualitative Perf...
Cost Benefit Methodology  “ TO BE ”  Design Quantitative Cost Drivers  Cost Driver Improvements for each Technology Selected
IFTWG Analysis Tools Cost Benefit Methodology Final Output <ul><li>Qualitative Performance Score </li></ul><ul><ul><li>Cat...
Cost Benefit Methodology  Final Output Quantitative Results Qualitative Results
 
Summary: <ul><li>IFTWG members proposed 8 projects from the annual meeting in San Antonio in 2004 </li></ul><ul><ul><li>Si...
The End Please write or call: Michael P. Onder, E-mail:  [email_address] Telephone: 202-366-2639
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IFTWG Overview Project Selection and

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  • 2004 to 2005 Emphasize we have focused the group’s effort on getting closer to industry concerns and what drives industry to make the investment.
  • In this slide emphasize the roundtable discussions. Discuss how the format of the discussion has been 5 questions and the discussion was has made it through two questions at both San Antonio and Chicago On the bullet of Rigorous Analysis introduce Cost Benefit and indicate we will walk through the process.
  • The Qualitative Standard Performance Metrics are focused on Reliability, Responsiveness, Flexibility, Assets, Safety, Security Standards developed in the Supply Chain Industry and are currently being used. This also sets a baseline for the evaluation team. Quantitative Metrics --- What does it cost to perform the process today?
  • Once the business process is mapped and metrics set as a baseline, and new design is evaluated based on the “TO BE” Design. Improvements in the Process are input both on the Qualitative and Quantitative sides in the CBM. This gives a comprehensive look at how the project will fair with the new technology implemented.
  • Net Annual Cash Flow= annual savings – annual costs Net Present Value = sum of the present value of all cash flows (each cash flow is discounted to present value using the minimum attractive rate of return (MARR) and the number of periods (N)). This number should be greater than zero. Internal Rate of Return (IRR)= the rate at which the net present value of a series of cash flows is zero. For a project or technology to be acceptable the IRR should be greater than the minimum attractive rate of return (MARR). Payback- this is the amount of time in years that it takes to pay back the initial investment. Initial investment/Net Annual Cash Flow. Discounted Payback- this is the same as above but the net annual cash flows are discounted to present value using the MARR. Benefit/Cost- the present value of all positive cash flows divided by the present value of all negative cash flows.
  • Transcript of "IFTWG Overview Project Selection and "

    1. 1. IFTWG Overview Project Selection and Cost Benefit Analysis Michael P. Onder, Team Leader Office of Freight Management and Operations USDOT-FHWA CVFM Presentation August 31, 2005 IFTWG Intermodal Freight Technology Working Group
    2. 2. IFTWG Historical Summary: 1998 Formed by joint recommendation Industry, government, military, vendors 1999 2004 2005 Chartered to address consensus needs Based on operational/ process analysis <ul><li>Met regularly </li></ul><ul><li>2-3 times/year w/ITS America </li></ul><ul><li>Communicated program/ project information </li></ul><ul><li>Formulated, planned, reviewed project results </li></ul><ul><li>Identified/sponsored pilot demonstrations </li></ul><ul><li>Injected technology into business practices </li></ul><ul><li>Formulated to facilitate technical/operational evaluation </li></ul><ul><li>“ Business case” analysis incorporated for sustainability analysis </li></ul>2003 <ul><li>Meetings </li></ul><ul><li>Two Annual meetings to coincide with IANA meeting </li></ul><ul><li>Intercessional Web Cast </li></ul><ul><li>Outreach to CHCP </li></ul><ul><li>Project Planning Process </li></ul><ul><li>Revamped to expand industry participation </li></ul><ul><li>Introduced Working Group Project Vetting Process </li></ul><ul><li>Selection Process implemented </li></ul><ul><li>Introduced Analysis Tools focused on Business Process and Cost Benefit Analysis </li></ul>
    3. 3. Working Group Philosophy: <ul><li>The IFTWG is a Forum : </li></ul><ul><li>For key members of the stakeholder community to collaborate across organizational and institutional boundaries </li></ul><ul><li>For identifying, vetting, analyzing, and evaluating technological / procedural solutions to challenges within the intermodal freight transportation community </li></ul><ul><li>For promoting the application and adoption of technology to improve freight movement </li></ul>
    4. 4. Stakeholders: <ul><li>Industry </li></ul><ul><ul><li>Members : Union Pacific Railroad, American Presidents Line, Hanjin Shipping, Norfolk Southern Railroad, Landstar, Limited Brands </li></ul></ul><ul><ul><li>Roles : Real-world test bed, project champions, assets </li></ul></ul><ul><li>Government </li></ul><ul><ul><li>Members : FHWA, TSA, RITA, CBP, Joint Program Office ITS </li></ul></ul><ul><ul><li>Roles : Facilitation, reduction/removal of barriers to collaboration </li></ul></ul><ul><li>Vendors </li></ul><ul><ul><li>Members : Trac Lease, TTX, The Greenbrier Companies, QUALCOMM INC., Embarcadero Systems Corporation, Optimization Alternatives </li></ul></ul><ul><ul><li>Roles : Practical, responsive evaluation-ready solutions </li></ul></ul>
    5. 5. Methods and Tools: <ul><li>Open discussions </li></ul><ul><ul><li>Sharing of concerns and priorities </li></ul></ul><ul><ul><li>Exchange of ideas </li></ul></ul><ul><li>Transparent operations </li></ul><ul><ul><li>Documented meetings </li></ul></ul><ul><ul><li>Open access to leaders </li></ul></ul><ul><ul><li>Project Selection Process </li></ul></ul><ul><li>Rigorous analysis </li></ul><ul><ul><li>Project selection and feasibility methodologies </li></ul></ul><ul><ul><li>Evaluation of results </li></ul></ul>
    6. 6. Project Selection
    7. 7. IFTWG Analysis Tools Business Process Mapping <ul><li>“ AS IS ” Business Processes captured in the supply chain relative to the identified project </li></ul><ul><li>Business Process Maps include: </li></ul><ul><ul><li>Supply Chain Phase (Shipment, Transport, Delivery) </li></ul></ul><ul><ul><li>Organization/Party Performing the Work </li></ul></ul><ul><ul><li>Information Flows of data </li></ul></ul><ul><ul><li>Physical Flows of freight moving </li></ul></ul>
    8. 9. IFTWG Analysis Tools Cost Benefit Methodology “ AS IS ” Metrics <ul><li>Qualitative – Industry Standard Performance Metrics Linked to each Business Process </li></ul><ul><li>Quantitative – Cost Drivers Assigned to each Business Process </li></ul><ul><ul><li>Examples: </li></ul></ul><ul><ul><ul><li>Time to perform the task (Transport Time, Order to Delivery) </li></ul></ul></ul><ul><ul><ul><li>Number of Occurrences (Shipments, Orders) </li></ul></ul></ul>
    9. 10. Cost Benefit Methodology “ AS IS ” Metrics Qualitative Performance Measure Qualitative Performance Measure Selected
    10. 11. Cost Benefit Methodology “ AS IS ” Metrics Processes Selected Processes Selected and Associated with Qualitative Performance Measure
    11. 12. Cost Benefit Methodology “ AS IS ” Metrics Quantitative Cost Drivers Quantitative Cost Driver associated with Business Process “ AS IS” Value of Cost Driver Captured
    12. 13. IFTWG Analysis Tools Cost Benefit Methodology “ TO BE ” Design <ul><li>Expert Panel Evaluation of “TO BE” Project with Technology Deployed </li></ul><ul><ul><li>Inputs Performance Metric Improvements </li></ul></ul><ul><ul><li>Inputs Cost Driver Improvements </li></ul></ul><ul><li>User Inputs into CBM Tool </li></ul><ul><ul><li>Total Cost of the Project </li></ul></ul><ul><ul><li>Cost of Capital </li></ul></ul><ul><ul><li>Planned Life of the Project </li></ul></ul>
    13. 14. Cost Benefit Methodology “ TO BE ” Design Qualitative Performance Measure Potential Technology Rated by Qualitative Performance Measure
    14. 15. Cost Benefit Methodology “ TO BE ” Design Quantitative Cost Drivers Cost Driver Improvements for each Technology Selected
    15. 16. IFTWG Analysis Tools Cost Benefit Methodology Final Output <ul><li>Qualitative Performance Score </li></ul><ul><ul><li>Categories: Reliability, Responsiveness, Flexibility, Assets, Safety, Security </li></ul></ul><ul><ul><li>Score given as a total and an average </li></ul></ul><ul><li>Quantitative Results </li></ul><ul><ul><li>Net Present Value </li></ul></ul><ul><ul><li>Internal Rate of Return </li></ul></ul><ul><ul><li>Payback Period </li></ul></ul><ul><ul><li>Benefit Cost Ratio </li></ul></ul>
    16. 17. Cost Benefit Methodology Final Output Quantitative Results Qualitative Results
    17. 19. Summary: <ul><li>IFTWG members proposed 8 projects from the annual meeting in San Antonio in 2004 </li></ul><ul><ul><li>Six from industry, One from Government, One from the consultant community </li></ul></ul><ul><li>Selection Process rendered Two Top Projects in 2005– from industry stakeholders. </li></ul><ul><ul><ul><li>Chicago Cross Town Improvement Project </li></ul></ul></ul><ul><ul><ul><ul><li>Potential Partners include: Class One Railroads, Drayage Companies, TSA, FHWA, FRA </li></ul></ul></ul></ul><ul><ul><ul><li>Terminal Optimization Project </li></ul></ul></ul><ul><ul><ul><ul><li>Potential Partners include: Drayage Companies, Ports, Railroads, CHCP, MARAD </li></ul></ul></ul></ul><ul><li>Projects to be presented to USDOT as either exploratory or stand alone Tier II Projects when CBM Analysis is complete </li></ul>
    18. 20. The End Please write or call: Michael P. Onder, E-mail: [email_address] Telephone: 202-366-2639
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