The development of a sound financial plan is critical in securing adequate financing for a project. As soon as costs estimates are defined during the NEPA process, an Initial Financial Plan (IFP) is developed, the purpose of which is to provide a reasonable assurance that there will be sufficient financial resources available to implement the project as planned. For projects that involve financing, the IFP provides financial tools to identify the up-front capital for the project and lay out the anticipated revenue stream that will be used to repay the financing. For projects that require Federal financial assistance, the IFP must be submitted to and approved by the FHWA to trigger the flow of such funds for the project's construction.
Since most transportation projects, especially large-scale projects, are implemented over a number of years and involve numerous individual elements and stages, annual updates to the IFP are also developed throughout the entire project delivery process. These annual updates serve as an important planning tool - providing information on actual cost, expenditure and revenue performance in comparison to the initial estimates; and, tracking funding shortfalls, which allow developers to make the necessary financial adjustments to assure the completion of the project.
For further information on Financial Plan requirements and submittal processes, please refer to the FHWA Financial Plans Guidance (Jan 2007) document.