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Transit Economic Requirements Model (TERM)

Overview and Application July 10, 2009. Transit Economic Requirements Model (TERM). Agenda. Agenda. Overview Rehab-Replacement Module Application of TERM: Rail Mod Study. Overview. TERM: Purpose.

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Transit Economic Requirements Model (TERM)

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  1. Overview and Application July 10, 2009 Transit Economic Requirements Model (TERM)

  2. Agenda

  3. Agenda • Overview • Rehab-Replacement Module • Application of TERM: Rail Mod Study

  4. Overview

  5. TERM: Purpose • TERM is used to assess the current physical condition and future investment needs of the nation’s transit assets / operators • Analyses include: • Current physical conditions • Level of investment required to: • Maintain condition/performance • Improve condition/performance • Impact of constrained investment on future conditions / performance • Cost effectiveness of proposed investments (benefit–cost analyses) • Results reported in the transit sections of the “Status of the Nation’s Highways, Bridges, and Transit: Conditions and Performance”

  6. TERM Components • The TERM application consists of: • User Interface • Model Database • Inventory of US transit assets • Agency-mode operating characteristics • UZA demographics • Cost and investment benefits data by mode • User Defined Investment Scenarios • Asset rehabilitation and replacement polices • Budget constraints • Financial assumptions (inflation, discount rate) • Output Reports • Investment needs by type, mode and urban area size • Asset conditions forecasts

  7. 1 2 3 Rehab-Replace Asset Expan. Reduce Crowd Overview : Needs Investment Modules 4 6 5 Improve Speed Benefit-Cost II Benefit-Cost I • TERM uses six modules to estimate national transit investment needs: • Rehab–Replacement (Maintain or Improve Condition): Total investment required for rehabilitation and replacement of the nation’s existing transit assets • Asset Expansion (Maintain Performance): Total investment in new, expansion assets as required to maintain existing transit performance given projected growth in transit travel demand • Reduce Crowding (Improve Performance I): Expansion investments to reduce crowding in local agency-modes with a high vehicle occupancies • Increase Average Speed (Improve Performance II): Expansion investments in higher speed modes (HRT, LRT, or BRT) to improve performance in urbanized areas (UZAs) with low operating speeds • Benefit-Cost I (Maintain/Improve Condition, Maintain Performance): Evaluates cost-effectiveness of rehab-replacement and asset expansion investments • Benefit-Cost II (Improve Performance): Evaluates cost-effectiveness of performance improvement investments

  8. Capital Needs Assessment are Inclusive of All Asset Types Stations / Facilities Transportation Networks • Administration • Maintenance • Passenger • Guideway • Track • Dedicated Lanes Transit Asset Base Vehicle Fleets Systems • Rail • Buses / Vans / • Non-Revenue • Electrification • Communications • Control Systems Equipment / Furnishings New Technologies • Maint. Equip. • Computers • Elevators / Escalators • - AVL / CAD / APC • Real Time Info

  9. Capital Needs Assessment are Inclusive of All Asset Types

  10. Rehab-Replacement Module

  11. Rehab-Replacement: Overview • Estimates investment needs for rehabilitation and replacement of: • All urban and rural transit agencies • All transit asset types • This includes: • Elimination of any investment backlog (“deferred investment”) • Normal replacement of assets reaching the end of their useful life • Mid-life rehabilitations • Annual capital expenditures • Needs estimated for each year of a twenty-year forecast period

  12. Rehab-Replacement: Asset Decay Simulation • Rehab-Replacement Module simulates the full asset life cycle and decay of all transit assets types — including: • Asset use (e.g., vehicle mileage, annual boardings, hours of service, etc.) • Annual maintenance, • Aging (years of service) • Life cycle events (capital maintenance, rehabs/rebuilds and replacement) • Analysis relies on: • A detailed transit asset inventory • Asset investment policy (timing of life-cycle events) • Empirically derived decay curves (predict asset condition based on asset type, age, maintenance and utilization) • Analysis predicts current assets physical condition and timing /cost of life-cycle events over the next twenty years

  13. Rehab-Replacement: Asset Decay Simulation Asset Decay Process Asset Inventory Model Run: Needs Forecast Investment Policy Listing of Current Asset Inventory (Track, Structures, Systems, Facilities, Vehicles, Stations) Simulated Decay, Rehab and Replacement of Transit Assets Over Twenty Year Period Rehabilitate / replace all assets with a condition of 2.5 or lower SGR Needs Forecast Asset Conditions Forecast

  14. Rehab-Replacement: Asset Decay and Life Cycle Events

  15. Example 20 Year Needs Forecast (Unconstrained)

  16. Overview : Current and Forecast Physical Conditions • TERM uses empirically derived decay curves to estimate the current physical condition of all transit assets • Curves used to determine those points in the asset life cycle (i.e., condition ratings) at which assets will require rehabilitation and replacement • Curves also used to generate forecasts of how transit asset conditions are expected to change under differing scenarios. This capability that allows TERM to run the “maintain” and “improve” conditions scenarios TERM’s Condition Rating System

  17. Current Conditions

  18. 1477-0006SF00 Maintain Existing Conditions 4.25 Improve Existing Conditions Condition 4.00 3.75 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Year Aggregate Physical Condition Forecast

  19. Rehab-Replacement: Asset Inventory • TERM’s asset inventory documents the capital assets of more than 600 urban and rural transit operators • Inventory records documents each asset’s type, acquisition date, replacement cost, quantity, owner agency and mode • Inventory uses a hierarchical structure with roughly 400 asset types

  20. Application of TERM: Rail Mod Study

  21. The Rail Modernization Study used TERM to: • Assess the state of good repair needs of nine rail operators (14 rail modes) listed below • Investigation excluded: • Capacity improvements, major betterments, safety /security • Non-rail assets (e.g., bus, paratransit, ferry) Agencies/Modes Considered

  22. Agency Selection • These nine agencies operate the majority of the nation’s rail assets and serve the majority of it’s rail riders

  23. Current Conditions • The nine agencies also operate and maintain many of the nation’s oldest transit assets • More than one-third (34%) of the nine agency’s assets are in either marginal or poor condition • In comparison, less than 20% of all US transit assets are in marginal or poor condition • This suggests agency reinvestment needs (per dollar invested) are higher than the rest of the industry

  24. Needs Estimation Approach • Use FTA’s Transit Economic Requirements Model (TERM) to estimate level of investment required to bring the nine agencies to a state of good repair • Only includes rehabilitation and replacement investments • Analysis relied on agency provided asset inventories • Applied consistent definition of “state of good repair” to all agencies • FTA team met with staff from study agencies to review analysis results • SGR Needs Estimates do Not Include: • System improvement, expansion or capacity improvements • Investment needs of other US transit operators • Do include non-rail capital needs of the nine study agencies

  25. Definition of State of Good Repair (SGR) • “SGR” defined using TERM’s numerically based conditions rating system • An asset, group of assets or entire agency is in a state of good repair when the physical condition of that asset (or all assets owned by an agency) is at or above a condition rating of 2.50 • The level of investment required to attain and maintain a state of good repair is therefore that amount required to rehabilitate and replace all assets with an estimated condition of 2.50 or less TERM’s Condition Rating System

  26. Needs Estimates • The current SGR backlog for the nine agencies is roughly $50.0 billion ($2008) • Once this backlog has been addressed, an additional annual investment of $5.9 billion would be required to maintain SGR • Alternatively, a total annual investment of $8.4 billion would attain SGR over a twenty-year period while simultaneously addressing normal replacement needs (or $2.5 billion to address the backlog alone) • The current annual reinvestment rate is roughly $5.4 billion, or about $0.5 billion less than the $5.9 billion in normal replacement needs Study Agency SGR and Annual Normal Replacement Needs (Billions of $2008)

  27. Needs Estimates

  28. Investment vs. Condition

  29. Needs vs. Current Expenditures • The current annual $5.4 billion reinvestment rate is: • Less than the $5.9 required for normal replacement • Well below the $8.4 required to address both normal replacement backlog needs • Hence, in the absence of additional funding, the physical condition of these nine agencies is expected worsen

  30. Questions?

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