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 IFTWG Historical Summary: 1998 Formed by joint recommendation Industry, government, military, vendors Chartered to address consensus needs Based on operational/ process analysis Met regularly 2-3 times/year w/ITS America Communicated program/ project information Formulated, planned, reviewed project results Identified/sponsored pilot demonstrations Injected technology into business practices Formulated to facilitate technical/operational evaluation “Business case” analysis incorporated for sustainability analysis 2003 Meetings Two Annual meetings to coincide with IANA meeting Intercessional Web Cast Outreach to CHCP Project Planning Process Revamped to expand industry participation Introduced Working Group Project Vetting Process Selection Process implemented Introduced Analysis Tools focused on Business Process and Cost Benefit Analysis

3 Working Group Philosophy: The IFTWG is a Forum: For key members of the stakeholder community to collaborate across organizational and institutional boundaries For identifying, vetting, analyzing, and evaluating technological / procedural solutions to challenges within the intermodal freight transportation community For promoting the application and adoption of technology to improve freight movement

4 Stakeholders: Industry –Members: Union Pacific Railroad, American Presidents Line, Hanjin Shipping, Norfolk Southern Railroad, Landstar, Limited Brands –Roles: Real-world test bed, project champions, assets Government –Members: FHWA, TSA, RITA, CBP, Joint Program Office ITS –Roles: Facilitation, reduction/removal of barriers to collaboration Vendors –Members: Trac Lease, TTX, The Greenbrier Companies, QUALCOMM INC., Embarcadero Systems Corporation, Optimization Alternatives –Roles: Practical, responsive evaluation-ready solutions

5 Methods and Tools: Open discussions –Sharing of concerns and priorities –Exchange of ideas Transparent operations –Documented meetings –Open access to leaders –Project Selection Process Rigorous analysis –Project selection and feasibility methodologies –Evaluation of results

6 Project Selection

7 IFTWG Analysis Tools Business Process Mapping “AS IS” Business Processes captured in the supply chain relative to the identified project Business Process Maps include: –Supply Chain Phase (Shipment, Transport, Delivery) –Organization/Party Performing the Work –Information Flows of data –Physical Flows of freight moving

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9 IFTWG Analysis Tools Cost Benefit Methodology “AS IS” Metrics Qualitative – Industry Standard Performance Metrics Linked to each Business Process Quantitative – Cost Drivers Assigned to each Business Process –Examples: Time to perform the task (Transport Time, Order to Delivery) Number of Occurrences (Shipments, Orders)

10 Cost Benefit Methodology “AS IS” Metrics Qualitative Performance Measure Qualitative Performance Measure Selected

11 Cost Benefit Methodology “AS IS” Metrics Processes Selected Processes Selected and Associated with Qualitative Performance Measure

12 Cost Benefit Methodology “AS IS” Metrics Quantitative Cost Drivers Quantitative Cost Driver associated with Business Process “AS IS” Value of Cost Driver Captured

13 IFTWG Analysis Tools Cost Benefit Methodology “TO BE” Design Expert Panel Evaluation of “TO BE” Project with Technology Deployed –Inputs Performance Metric Improvements –Inputs Cost Driver Improvements User Inputs into CBM Tool –Total Cost of the Project –Cost of Capital –Planned Life of the Project

14 Cost Benefit Methodology “TO BE” Design Qualitative Performance Measure Potential Technology Rated by Qualitative Performance Measure

15 Cost Benefit Methodology “TO BE” Design Quantitative Cost Drivers Cost Driver Improvements for each Technology Selected

16 IFTWG Analysis Tools Cost Benefit Methodology Final Output Qualitative Performance Score –Categories: Reliability, Responsiveness, Flexibility, Assets, Safety, Security –Score given as a total and an average Quantitative Results –Net Present Value –Internal Rate of Return –Payback Period –Benefit Cost Ratio

17 Cost Benefit Methodology Final Output Quantitative Results Qualitative Results

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19 Summary: IFTWG members proposed 8 projects from the annual meeting in San Antonio in 2004 –Six from industry, One from Government, One from the consultant community Selection Process rendered Two Top Projects in 2005– from industry stakeholders. Chicago Cross Town Improvement Project –Potential Partners include: Class One Railroads, Drayage Companies, TSA, FHWA, FRA Terminal Optimization Project –Potential Partners include: Drayage Companies, Ports, Railroads, CHCP, MARAD Projects to be presented to USDOT as either exploratory or stand alone Tier II Projects when CBM Analysis is complete

20 The End Please write or call: Michael P. Onder, Telephone: