Delivering a federally funded transit project under budget could carry more advantages than just bragging rights; the savings generated could be used to extend a project’s benefits.
The Federal Transit Administration (FTA) is encouraging participants in its Capital Investment Grant (CIG) program to develop realistic cost estimates when planning these projects. Not only will a reliable cost estimate establish a baseline for a project, but some of the savings generated can then be used on eligible activities.
What exactly does this mean?
FTA’s Full Funding Grant Agreement stipulates that both the grantee and FTA share in the cost savings based on the original CIG share. If a project is delivered with $50 million in total cost savings, the grantee would keep $25 million and the remaining $25 million would be returned to the FTA.
New fixed guideway or core capacity projects in the CIG program have more options for cost savings generated from a project delivered under budget. For grantees of these types of projects, FTA is permitted under federal transportation law to adjust the final net project cost to include eligible activities not included in the originally defined project if FTA determines that the originally defined project has been completed at a cost that is below the original estimate.
Acting Administrator K. Jane Williams touched on this topic briefly during her remarks at the American Public Transportation Association’s 2019 TRANSform Conference held in New York City in mid-October.
“Let me tell you why it is so important to ensure that project cost estimates are realistic from the start. Consider the fact that when you complete projects under budget and open for service ahead of schedule, FTA has the authority to approve additional project activities using the federal share of your cost savings, if the proposed use is integral to the success of the existing project,” said Acting Administrator Williams. “We encourage project sponsors who bring projects in on time and under budget and achieve cost savings to discuss these options with us. As your partner, we want to continue to support your efforts.”
FTA says to incentivize CIG projects be completed under budget it will consider proposals from grant recipients for additional project activities, using the federal share of cost savings, if the project is completed under budget. Additionally, FTA will permit project sponsors to use cost savings for additional project activities and will participate at the lower of either the original CIG share of the project, or 50 percent of the proposed cost, if the proposed activities will have substantial benefits to the existing project, such as improved safety or increased ridership.
Taking advantage of these opportunities to deliver added value to a transit project starts with a reliable cost estimate and the FTA has several tools, such as historic capital costs of projects and GAO’s cost estimate and assessment guide, among many others, on its website to aid in this effort.
