Interim Major Project Financial Plan Guidance
U.S. Department of
|Subject:||INFORMATION: Issuance of MAP-21 Interim Major Project Financial Plan Guidance||Date:||September 24, 2012|
|From:||Regina S. McElroy
Director, Office of Innovative Program Delivery
|Reply to Attn. of:||HIN|
Chief Financial Officer
Directors of Field Services
Federal Lands Highway Division Engineers
Director of Technical Services
On July 6, 2012, the President signed into law the new surface transportation act, Moving Ahead for Progress in the 21st Century (MAP-21) (Pub.L. 112-141). Changes to the requirements for a Financial Plan include a phasing plan when there are insufficient financial resources to complete the entire project and an assessment of a public-private partnership to deliver the project. These changes are contained in section 1503(a)(4) of MAP 21, which amends 23 U.S.C. 106(h). With these amendments, 23 U.S.C. 106(h) reads as follows (MAP-21 amendments are shown in bold):
(h) MAJOR PROJECTS.-
- IN GENERAL. - Notwithstanding any other provision of this section, a recipient of Federal financial assistance for a project under this title with an estimated total cost of $500,000,000 or more, and recipients for such other projects as may be identified by the Secretary, shall submit to the Secretary for each project -
- a project management plan; and
- an annual financial plan, including a phasing plan when applicable.
- PROJECT MANAGEMENT PLAN. - A project management plan shall document -
- the procedures and processes that are in effect to provide timely information to the project decisionmakers to effectively manage the scope, costs, schedules, and quality of, and the Federal requirements applicable to, the project; and
- the role of the agency leadership and management team in the delivery of the project.
- FINANCIAL PLAN- A financial plan--
- shall be based on detailed estimates of the cost to complete the project;
- shall provide for the annual submission of updates to the Secretary that are based on reasonable assumptions, as determined by the Secretary, of future increases in the cost to complete the project;
- may include a phasing plan that identifies fundable incremental improvements or phases that will address the purpose and the need of the project in the short term in the event there are insufficient financial resources to complete the entire project. If a phasing plan is adopted for a project pursuant to this section, the project shall be deemed to satisfy the fiscal constraint requirements in the statewide and metropolitan planning requirements in sections 134 and 135; and
- shall assess the appropriateness of a public-private partnership to deliver the project.
Issuance of Interim Guidance:
In response to the enactment of MAP-21, the Federal Highway Administration (FHWA) is issuing this interim guidance on the requirements for Major Project Financial Plans. Formal revisions to the existing 2007 Financial Plan Guidance to integrate more thorough implementation are underway and will be issued at a later date. Until then, this interim guidance will amend the existing 2007 Financial Plan Guidance to incorporate the MAP 21 changes.
This interim guidance takes effect October 1, 2012, and applies to Financial Plans for Major Projects as defined by 23 U.S.C. 106(h) and for Other Projects as defined by 23 U.S.C. 106(i). Be aware there may be additional considerations and requirements for financial plans for multi-modal projects that would need to be coordinated with other relevant DOT modes such as FTA or FRA.
A phasing plan submitted to FHWA for approval under 23 U.S.C. 106(h)(3)(C) should include the following:
A description of each phase, including scope, cost estimate, and schedule, as well as a completion date for the entire project. All cost estimate reviews will evaluate the cost estimate for each of the proposed phases to be identified in the Financial Plan.
Documentation that each phase represents a portion of the project that can be opened to the public and that such portion can be effectively operated without any other phase being completed.
Demonstration that funding has been identified and committed for the entire phase when construction funding for any portion of that phase is identified in the approved STIP at the time of the Financial Plan submittal.
A discussion of how the phasing of the project is consistent with the NEPA decision document. This discussion should include how the purpose and need is addressed in the event only the funded phase is built. Phasing of the project should not conflict with the project's decisions or required mitigations identified and committed to in the NEPA decision document. The schedule associated with the phases in the Financial Plan should not substantially conflict with the schedules identified in the NEPA decision document.
Operational Independence and Non-Concurrent Construction (OINCC) requests after October 1 will only be approved by FHWA for major projects with subsequent phases under construction 20 or more years after the initial construction project begins. This determination will be made in accordance with existing OINCC guidance. For all other projects, the Financial Plan should include a phasing plan to address operational independent phases of construction.
To implement 23 U.S.C. 106(h)(3)(D), FHWA will approve a Financial Plan only if an assessment of the appropriateness of a public-private partnership to deliver the project is included. All Initial Finance Plans submitted on or after October 1, whether or not a public-private partnership is expected to be used to deliver the project, must include this assessment.
To support the preparation of this assessment, beginning after October 1, all cost estimate reviews that are conducted prior to the issuance of the NEPA Decision Document will include a component to analyze the allocation of risk with respect to delivering the project through a public-private partnership procurement.
Since a public-private partnership can also be an effective financing method for the delivery of a major project, FHWA is undertaking efforts to determine when public-private partnerships should be considered during the planning process. This will be addressed in future guidance.
The assessment in the Financial Plan is expected to be brief and should include the following:
Documentation of the results of the risk allocation analysis, if completed during the cost estimate review conducted prior to issuance of the NEPA Decision Document.
A discussion of whether a public-private partnership or traditional procurement could more effectively leverage the revenue stream for the project, including the available debt capacity and cost of capital for both the public and private sector.
A discussion of the current State-level legislative authorizations for public-private partnerships, including legislative authorizations regarding public sector debt capacity.
A concluding statement regarding the appropriateness of a public-private partnership to deliver the project.
The Office of Innovative Program Delivery is in the process of revising existing guidance documents on Major Project Financial Plans and Operational Independent and Non-Concurrent Construction to reflect the changes to the program made by MAP-21. The Division Offices will be kept informed as the revised guidance is posted for comments and finalized.
Questions may be addressed to Mr. Jim Sinnette, Team Leader of the Project Delivery Team.