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State of Maine Return on Investment Analysis for Ortho-imagery Acquisition Prepared for the GeoLibrary Board and the FGDC Coordination Group November 13,

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Presentation on theme: "State of Maine Return on Investment Analysis for Ortho-imagery Acquisition Prepared for the GeoLibrary Board and the FGDC Coordination Group November 13,"— Presentation transcript:

1 State of Maine Return on Investment Analysis for Ortho-imagery Acquisition Prepared for the GeoLibrary Board and the FGDC Coordination Group November 13, 2012 with

2 ©2012 Applied Geographics, Inc.Slide 2 Overall Project Scope & Purpose Creating Quantifiable Results Scope: – FGDC Category 5 ROI training – Interviews with subject matter experts to determine value of orthoimagery – Real examples of cost savings due to ortho-imagery – ROI Case Study – ROI spreadsheets, analyses and multi-agency business cases – Present findings Purpose: – Assess and document the value of ortho-imagery in quantifiable terms – Use the results to provide a tool to decision makers

3 ©2012 Applied Geographics, Inc.Slide 3 Project Approach Overview of Plan for Maine Ortho-imagery ROI Study Step 1: Identify potential use cases and pick 3 for in-depth study Step 2: Identify specific stakeholders and gather input on value of ortho-imagery Step 3: Calculate benefits for each use case Step 4: Scale use case dollar values to statewide model Step 5: Combine the benefits and orthoimagery costs into the ROI calculation

4 ©2012 Applied Geographics, Inc.Slide 4 Project Approach Step One: Identified Three Use Cases Asset Management Site Selection Planning/ Reconnaissance Code Enforcement Improved Services Infrastructure Planning Support for Field Work/Inspections Preservation Change Over Time Comparison Natural Disaster Planning Assessing Current Conditions Improving Spatial Data Accuracy Identifying Encroachment Monitoring Operations/Management Harvesting/Managing Resources Attractive Procurement Efficiencies ForestryXXXXXXXXX StormwaterXXXXXXXX TransportationXXXXXXXXXXXX Wildlife HabitatXXXXXXXX Flood ManagementXXXXXXX Search & RescueXXXXXX AgricultureXXXXXXXXX Emergency Response XXXXXXXX Utilities/PipelinesXXXXXXXXXX FisheriesXXXXXXX Municipal Government XXXXXXXXXXXXXX Economic Development XXXXXXXX BroadbandXXXXX ** Teal squares indicate use cases that were studied and documented as part of this report.

5 ©2012 Applied Geographics, Inc.Slide 5 Project Approach Step Two: Identified Specific Stakeholders for Contact Outreach and interviews conducted by the AppGeo team Interviewees included professionals from the public and private sector, including but not limited to: Forestry – Cooperative Forestry Research Unit at University of Maine – Huber Resource Corporation – James W. Sewall Company – Maine Forest Service – UMaine Image Analysis Lab – Seven Island Land Company – Small Woodland Owner’s Association of Maine – USDA (US Forest Service) Stormwater Management – City of Portland – Maine Department of Environmental Protection – Town of Hampden – FB Environmental Associates Transportation – City of Portland – DeLuca-Hoffman Associates, Inc. – Greater Portland Council of Government – Maine Department of Transportation – Portland International Jetport

6 ©2012 Applied Geographics, Inc.Slide 6 Project Approach Step Three: Calculated Benefits Based on Input From Interviews Actual examples of benefits from case studies included: – Cost avoidance – Revenue generation – Increased productivity – Higher quality results – Time savings

7 ©2012 Applied Geographics, Inc.Slide 7 Project Approach Step Four: Scaled Results Statewide Forestry: Scaled to represent benefits from different applications where and when they occur Stormwater Management: Scaled to represent the 29 Maine communities in Municipal Separate Storm Sewer System (MS4) program Transportation: – Maine DOT benefits considered statewide – GPCOG benefits scaled to represent other COG’s potentially involved in orthoimagery procurement – Private sector benefits scaled to represent engineering firms serving airport sector (subset of transportation)

8 ©2012 Applied Geographics, Inc.Slide 8 Project Approach Step Five: Combined Benefits and Costs Produced Net Present Value (NPV) – the difference between the present value of benefits and present value of costs Benefits and costs processed to yield Return on Investment (ROI) using Cost-benefit Analysis techniques

9 ©2012 Applied Geographics, Inc.Slide 9 CBA Equations The formula for calculating Net Present Value (NPV) is: NPV = ∑ [(B t - C t ) / (1 + r) t ] – Notation: B = Benefits; C = Costs; r = discount rate; t = time period. The summation ∑ in the equation above is from t = 0 (the initial start-up of the program) to t = n (the final year of the program). The formula for calculating the ROI, using the results of the NPV calculations as inputs, is: Discounted Benefits - Discounted Costs Discounted Costs

10 ©2012 Applied Geographics, Inc.Slide 10 FGDC ROI Workbook Methodology Components of CBA Costs Benefits Time Period Inflation Rate Opportunity Cost of Capital Discount Rate Net Present Value Sensitivity Analysis Return on Investment (ROI) Calculation

11 ©2012 Applied Geographics, Inc.Slide 11 Methodology Applied to Maine ROI Study on Ortho-imagery

12 ©2012 Applied Geographics, Inc.Slide 12 Estimating Ortho-imagery Project Costs These are the total project costs that factor into the final Cost-Benefit Analysis worksheet. The values in this section of the table feed into the annual section costs above. The values in this section of the table feed into the annual section costs above.

13 ©2012 Applied Geographics, Inc.Slide 13 Estimating Ortho-imagery Project Benefits Example: Forestry Harvesting Benefits The values in this table are based on high/low final values coming from section A and B. The final values highlighted in blue for each section (A and B) feed into the summary table at the top. The final values highlighted in blue for each section (A and B) feed into the summary table at the top.

14 ©2012 Applied Geographics, Inc.Slide 14 Estimating Ortho-imagery Project Benefits Benefits Summary These “Low” and “High” benefit totals feed into the final Cost- Benefit Analysis worksheet.

15 ©2012 Applied Geographics, Inc.Slide 15 Estimating Orthoimagery Project Benefits Ortho-imagery Cost-benefit Analysis

16 ©2012 Applied Geographics, Inc.Slide 16 Use Case How is Ortho-imagery applied to Forestry? Forest Stand Classification Harvest Plans Forest Health Monitoring Biodiversity Studies Monitoring Easements or Encroachment Assessing forest change and conversion to developed use Forest Stand Mapping for Maine DEP Photo: Sanborn Map Company

17 ©2012 Applied Geographics, Inc.Slide 17 Calculated Benefits of Ortho-imagery Forest Harvesting TIME SAVING BENEFITS Estimates for time savings range from 2-4 hours per forester per week, based on plots per forester per day, using current orthoimagery for reconnaissance before going into the woods  At 2 hours less time per week and 20 plots per day per forester, the commensurate savings from orthoimagery are: Low estimate of $131,100 per yr.  At 4 hours less time per week and 25 plots per day per forester, the commensurate savings are: High estimate of $327,750 per yr. HIGHER QUALITY RESULTS: INCREASED HARVEST VALUE BENEFITS Annual estimates for increased value based on using current orthoimagery for reconnaissance range from $100-$500 per 1000 acres  Increased value for 500,000 harvested acres / year on low-end of range ($0.20 / acre): Low estimate of $100,000  Increased value for 500,000 harvested acres / year on high-end of range ($1.00 / acre): High estimate of $500,000

18 ©2012 Applied Geographics, Inc.Slide 18 Calculated Benefits of Ortho-imagery Forest Monitoring TIME SAVING BENEFITS While it is a fair assumption that the availability of orthoimagery results in time savings associated with field visits for forest monitoring, none of the subject matter experts were able to comfortably quantify this time savings, so no specific benefits were included in this category for the monitoring part of the benefits calculation for the forestry use case. HIGHER QUALITY RESULTS BENEFITS Conservative estimates range from $10-$15 of benefits per square mile from improved monitoring results across all types of forest research and assessment (not including the plot sampling benefits for the annual harvest, which are measured separately)  Average estimated value, annually (since only a portion of the total square mileage will have new orthoimagery each year, the estimates are factored down by a commensurate amount): Low estimate $70,038; High estimate $105,057

19 ©2012 Applied Geographics, Inc.Slide 19 Use Case How is Ortho-imagery applied to Stormwater Management? Support for mapping of utility assets and features Aids in calculating impervious surface areas Resolve disputes and appeals of current assessments Support and validate taxpayer inquiries Photo:

20 ©2012 Applied Geographics, Inc.Slide 20 Calculated Benefits of Ortho-imagery Improved Stormwater Management TIME SAVINGS BENEFITS  At 1 to 4 hours of orthoimagery use per day, the Stormwater Program saves between $67,095 and $357,840 annually over using alternative mapping data  Municipal officials working under MS4 permit requirements utilize orthoimagery as well for about 1 to 4 hours daily, saving between $6,213 and $24,850 annually. LOWER COST BENEFITS  The same multiplier can be applied to smaller MS4 towns to account for similar saving in Maine’s 28 MS4 communities: Statewide this savings would ranges $173,964 to $695,800 in lower costs to municipal operations associated with being an MS4 permit holder

21 ©2012 Applied Geographics, Inc.Slide 21 Use Case How is Ortho-imagery applied to Transportation? Communication and Information Gathering Tool Planning and Site Assessment Data Maintenance Asset Management Operations and Maintenance Plans for highway widening in Portland, Maine Photo: Rights of Way

22 ©2012 Applied Geographics, Inc.Slide 22 Calculated Benefits of Ortho-imagery Transportation TIME SAVINGS FOR MAINTENANCE OF STATEWIDE ROAD INVENTORY  Resulting value of orthoimagery equals salary of 1 full time field crew member or TIME SAVINGS THROUGH IMPROVED COMMUNICATION TOOLS  With 75 ME DOT staff members accessing orthoimagery through web-based GIS viewers at a conservative cost of $21.63 per hour, this results in a cost savings between $84,375 and $168,750 annually TIME SAVINGS THROUGH AVOIDED TRIPS TO THE FIELD  At an hourly rate of $21.63, these time savings result in cost savings of $16,875 to $33,750 annually

23 ©2012 Applied Geographics, Inc.Slide 23 Calculated Benefits of Ortho-imagery Transportation TIME SAVINGS THROUGH STREAMLINED PROCUREMENT  If the coordination cost for one flight is scaled across the 8 regional entities that conduct these projects, the statewide cost is between $149,760 to $224,640 every 3 years TIME SAVINGS FOR PRIVATE SECTOR PROJECT WORK  There are approximately 8 private sector firms comparable to DeLuca- Hoffman performing airport transportation planning in the State of Maine. If project cost savings are scaled up to account for these additional firms, the cost savings statewide is $225,000 to $450,000

24 ©2012 Applied Geographics, Inc.Slide 24 Findings Return on Investment by Use Case USE CASE BENEFITS (Lo/Hi)NPVROI Stormwater $9,879,481$9,877, $26,134,258$23,722, Forestry $1,505,690($905,876)-0.38 $4,664,035$2,252, Transportation $1,630,770($780,796)-0.32 $2,886,780$475, Combined $13,015,941$10,501, $33,685,073$31,006,

25 ©2012 Applied Geographics, Inc.Slide 25 Findings Overall Return on Investment

26 ©2012 Applied Geographics, Inc.Slide 26 Findings Favorable Return on Investment Low ROI = 4.35 High ROI = Benefits range from $10 million to $30 million Costs for same time period are $2.4 million

27 ©2012 Applied Geographics, Inc.Slide 27 QUESTIONS? QUESTIONS? Richard Grady (617) Prepared for the Maine GeoLibrary Board and the FGDC Coordination Group


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