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Major Projects


Major Project Financial Plan Guidance Update - Transcript

FHWA Center for Innovative Finance Support
February 5, 2015

Presented by

LaToya Johnson
Major Projects Delivery Team
Center for Innovative Finance Support

Jim Sinnette
Project Delivery Team Leader
Center for Innovative Finance Support

Dana Williams
Outreach and Communications Specialist
Center for Innovative Finance Support

Table of Contents


Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Major Project Financial Plan Webinar. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session; instructions will be given at that time. If you should require assistance during the call, please press star then zero. I would now like to turn the conference over to your host, Michael Kay. Please go ahead, sir.

Michael Kay: Thank you, Derek. And on behalf of the Federal Highway Administration's Innovative Program Delivery office, I would like to welcome everyone to today's webinar, An Update on Major Project Financial Plan Guidance. My name is Michael Kay and I'm with the USDOT's Volpe Center in Cambridge, Massachusetts. I will be moderating today's webinar as well as helping to facilitate our question and answer periods and in helping to address any technical problems. Just to quickly orient you to the web room, on the top left hand side of your screen, you'll find the audio call in information. I know many of you are listening through your computer speakers, if you end up having any bandwidth issues, I do recommend that you dial into that toll free number. Below that, the attendee list, below that a materials for download box where you can download today's presentation as well as a guidance flier and a couple of timelines. Simply click on those files individually, click download files and follow the prompts on your screen. And on the bottom left is a chat box that you can use to ask questions of our presenters throughout. We'll take chat box questions periodically and then at the very end, time permitting, we'll open up the phone lines. I do want to mention that we are recording today's webinar so that any of your colleagues who can't join us today may be able to listen at a later date. We have two presenters today, Jim Sinnette, Project Delivery Team Leader in the Center for Innovative Finance Support and LaToya Johnson, Major Project Engineer in the office of IPD. And with that, I'd like to turn it over to Jim Sinnette. Jim, go ahead.

Jim Sinnette: Thank you Michael. Good morning or afternoon everyone and thanks for joining this webinar. We're here to discuss the Federal Highway Administration's Major Project Financial Plan Guidance Update. It was posted in the Federal Register on December 18th and it was in effect beginning February 2nd.

Slide 2: Agenda

Jim Sinnette: So I'll just go over quickly the agenda for today's webinar and there'll be plenty of time, opportunity to either put questions in the chat pod for us or we'll have some opportunities to take questions or comments over the phone. So what we're going to do is we're going to talk briefly about the purpose of the financial plan, we'll talk briefly about why the guidance was updated then we'll get into more detail about what's in the new guidance, we'll discuss the content and then we'll talk about how the guidance is implemented, the expectations from the Federal Highway Headquarters office, the Division Office and the project sponsors. And then finally at the end we'll have a formal question input session from the participants.

Slide 3: Financial Plan Purpose

Jim Sinnette: So why do we have a financial plan requirement? Well, other than beyond that it's required by statute in the United States code, we see the finance plan as a way of ensuring that once a project begins construction using federal aid funds that funding is identified and available to complete the project. So to do that, the financial plan provides the scope of the project, the cost estimate, schedule, the funding and that helps us determine if there's reasonable assurance that there is funding to complete the project. So the financial plan is developed and submitted by the project sponsor and in the finance plan guidance, we've defined a project sponsor as any entity that not only provides funds for the project but they also must administer and construction or construction engineering activities. So sometimes a local agency will just provide funds and they won't be involved in the construction or the construction administration, we don't consider that a project sponsor for the purposes of the finance plan.

Slide 4: Financial Plan Changes

Jim Sinnette: So what are the changes in the finance plan and why do we have these changes? Well MAP-21 introduced two provisions; one was allowing the option for phasing plans. In the past, a project defined by NEPA documents had to have full funding for the entire project shown in the financial plan. MAP-21 allows for phasing of the project so you only need to show funding for certain useable sections of the overall project. MAP-21 also requires public, private partnership assessments and that applies whether or not the project is a P3 or not. And we'll go into details later on about exactly what that means. We also had a GAL audit of the Major Project Finance Plan and their recommendations included having a section on the financing costs of the major project and they also recommended that finance plans be posted on the public website. Our guidance right now says that we do recommend that but it's up to the project sponsor. We are not going to post all of the financial plans on our website. We do have three financial plans posted right now on the website but we've talked to the project sponsor, we've talked to the Division Office and got their permission to post that on there. So we will not be posting any financial plans on our website unless we have expressed permission from the project sponsors. We also made some clarifications and some revisions just to cover the new types of procurements when the initial guidance was first developed, it was mostly for design-bid projects. Right now we're getting a lot of P3 projects, there's of course TIFIA projects and even design-build projects we try to cover in the guidance to reflect the differences between those and the design-bid-build projects.

Slide 5: Financial Plan Changes (Cont.)

Jim Sinnette: This new updated guidance replaces the interim major project financial plan guidance that was developed and posted in September of 2012 and that interim guidance was to cover the MAP-21 provisions, so now those MAP-21 provisions are incorporated in the updated guidance. We had something called operational independence and non-concurrent construction guidance; we'll talk a little more about that later. But in December, 2009, we had separate guidance for that. We've incorporated that which we refer to as the OINCC into the updated guidance, so that's no longer needed. And then finally, the existing guidance that we were operating on was last updated January, 2007 and this guidance replaces that.

What is in the Guidance?

Slide 7: Projects That Require a Financial Plan

Jim Sinnette: So I wanted to talk about - I think we all know that the projects that need a financial plan are major projects and these projects are any project that receives federal financial assistance under Title 23 that has a total estimated cost of $500 million or more. The way the statute's written, Federal Highway can also designate projects that cost less than $500 million, a major project, but we rarely do that, so that's another major project category. The guidance also covers projects between $100 million and $500 million that are not designated as a major project. The difference there is that major project financial plans and annual updates must be submitted to Federal Highway for review and approval. The projects between $100 and $500 million, a financial plan does not have to be submitted for approval unless requested by the Federal Highway Division Office. And then all TIFIA projects require financial plan and the TIFIA loan agreements require that the borrower, even though it may be a total project less than $500 million and even though it may not be designated as a major project, the loan agreements for all TIFIA projects require the borrow to submit annual financial plans in accordance with this guidance.

Slide 8: Projects That Require a Financial Plan (Cont.)

Jim Sinnette: So I talked about what we call the OINCC ["oink"] which up to this point was a separate guidance document, and really the purpose of an OINCC is for long corridor projects or a long corridor project that's identified in an IPA decision document, if those projects are going to take a long time to build over 20 years, the purposes of having a financial plan for that project to cover an extended time period like that is really difficult to prepare and document. And so for the purposes of applying major project requirements only, we allow those types of projects to be separated out into separate what we call OINCC projects. And there's three criteria for that, any OINCC portion must be able to be open to the public and effectively operated without any other portion of the overall project being completed. So if you had a long corridor project we would want to see an OINCC project maybe from one interchange to the next interchange. The time period between the completion of the OINCC and the start of the next project, next portion, should exceed five years. So again, if these are truly separate projects then there should be a delay or an extended time period between the ending of the first portion and the beginning of the second portion - and we've decided that five years would meet that criteria. And then like I said before, the overall construction of the project should exceed 20 years. These OINCCs must be approved by Federal Highway in advance and this guidance is really very similar to the guidance that we had separately before this, so there's not really much change here.

Slide 9: Additional Financial Plan Considerations

Jim Sinnette: MAP-21 introduced the concept of phasing and the first bullet that sort of paraphrases what's in the United States code, that if there's insufficient financial resources immediately available to complete the entire project, then the financial plan may identify a phase or portion of that project and just only need to show funding for that portion. So when you do a phasing plan and a financial plan we want to see these phases as one individual phase and that's the only phase that you need to show funding for. Doesn't change what's required in the financial plan, the contents are still the same. Since this is a fairly new option, we recommend coordinating closely with Federal Highway to make sure that the financial plan is prepared in accordance with our guidance.

Slide 10: Additional Financial Plan Considerations (Cont.)

Jim Sinnette: And then there's always the option of when you do have multiple project sponsors on one project, you can prepare a single financial plan with a certification signed by all sponsors or each project sponsor can prepare their own financial plan and have their own separate certification. But when that happens, you should recognize that Federal Highway needs to put those plans together, they need to complement each other just so they should have the same reporting period and they should provide a total picture of the project.

Slide 11: Financial Plan Submittal Process

Jim Sinnette: So the submittal timing for an initial finance plan, it should be submitted and approved prior to the first authorization of federal funds for construction. And this really is the overarching principle for initial finance plans. We recognize that on some design-bid-build projects and some P3 projects, there could be some timing issues and again we recommend coordinating with Federal Highway in advance to discuss how those timing issues work and when's the best time to submit the initial finance plan. And then all annual updates should be submitted by the project sponsor no later than 90 days after the reporting period that's defined in the initial finance plan.

Slide 12: Financial Plan Submittal Process (Cont.)

Jim Sinnette: So financial plans that have TIFIA assistance, as I said before, all TIFIA projects will be submitting finance plans in accordance with this guidance. But TIFIA also requires additional information, so that will be as part of the TIFIA loan agreement so the financial plan that's submitted for TIFIA projects will have more information than what's shown in the financial plan guidance here. But again, that's part of the loan agreement with the TIFIA Office. All projects, all financial plans should have a project sponsor certification and that's just to ensure that the information is the best available information out there. It's signed by the CEO unless it's delegated in writing for this specific purpose and our financial plan guidance has a sample letter of certification in the appendix.

Slide 13: Financial Plan Submittal Process (Cont.)

Jim Sinnette: So the Federal Highway review and approval process is that the initial finance plan and all annual updates are submitted to the Federal Highway Division Office by the project sponsors. The Division Office will coordinate a review process with the project delivery team here in headquarters and then basically the review is just to make sure that it meets the financial plan guidance. Once headquarters receives the financial plan from the division, we allow up to 60 days to either provide an approval or comments. I just want to note that the Division Office is the office that provides the approvals back to the project sponsor and they do that after receiving concurrence from the headquarters office. So I'll stop here and see if we can answer any questions in the chat pod.


Michael Kay: Great, thanks, Jim. And let me just switch our view slightly so that we can expand upon our chat box. And just one has come in but everyone feel free to continue to submit questions through the chat box. The question is, "does FMIS 5 support pre data entry to these financial plans before authorization?"

Michael Kay: And actually I'm sorry, I skipped a question. So we can take them in either order. But the one before that was, "Does the new guidance cover CMGC procurements?" So in any order you wish, Jim.

Jim Sinnette: Let's take that one first; I have to think about that other one. The new guidance is intended to cover all types of procurement out there. But anything other than the typical design-bid-build procurement we recommend that the project sponsor talk to the Division Office and the Division Office bring us in as necessary to discuss the timing requirements for unique procurements like the CMGC. But there's nothing specifically in the financial plan guidance that says for CMGC projects this happens. Which is fine for innovative projects, there's just a lot of ways that you can do the procurement for those and it's really best handled by looking at it on a project specific basis.

Jim Sinnette: I guess we can go to the second one, does FMIS V support pre data entry to these financial plans before authorization? I can't answer that question. <laughs> Yeah, maybe you could expand on that. I don't understand, normally there's not a real connection between FMIS V and the financial plans, the financial plans is to represent the total cost and the funding and everything on the project and I'm sure FMIS is used to - data to prepare the financial plan. But I guess if you could provide a little more detail on that question.

Jim Sinnette: Go to the next one, how does the phasing approach affect TIPs and STIPs? I think you look at the phasing approach as when you have an identified phase in the financial plan, that's the project. So that's identified as the project that you need to show funding for. So if there's any - that project should be represented - that portion should be represented in the TIP and the STIP. What does not need to necessarily be represented in the TIP and the STIP are the unfunded phase of the project. So I don't know if it affects - I don't think you need to do the TIP and the STIP any differently, it's just that phase portion in the finance plan, the TIP and STIP would support that phase portion only, or that funded portion only.

Michael Kay: And Jim, the last question that we have in the chat box from Neil, he was confused about what you said about TIFIA loans. "Is the additional information required for TIFIA loans to be included in the financial plan?"

Jim Sinnette: Yes, what happens is TIFIA requires a financial model to show how the project's going to be paid back and there's lots of tables and charts and things like that. So usually that's shown as like an appendix to the financial plan. So there is some additional information that TIFIA would require that's related to the payback of the loan. If you look in their guidance, there's something that says that once the major project is completed, the construction is completed, there's no need to submit annual reports for the major project team, but TIFIA requires annual reports until the loan is completely paid back. And so that's the additional information that would be required for TIFIA.

Michael Kay: Great, thanks, Jim. And from Jeff, "Can you clarify the required timing of the IFP on a design-build project?"

Jim Sinnette: The IFP should be submitted and approved before the first federal funds for construction are authorized. Now sometimes in a design-build project the way the procurement is set up and the way the funds are authorized is that it's authorized both at the same time, design funds and construction funds are authorized at the same time. Other times in a design-build procurement, you can actually authorize the design funds first and have like a notice to proceed for construction later. And then if that's the case, then the initial finance plan could be submitted and approved before that notice to proceed for construction. So that's one of the reasons why it's important for design-build and P3s to talk with the division and it just relationship depends on the project and how the procurement is being planned for the project and how the construction authorization is being planned for the project. Sometimes the construction authorization occurs earlier in the procurement, sometimes it occurs later.

Michael Kay: Thanks, Jim. I don't see any other questions in the chat box. Oh, there's one right there. "What is the schedule for projects that involve P3s?"

Jim Sinnette: It's the same - the overall concept or philosophy is before federal funds are authorized for construction, an initial finance plan must be submitted and approved. So if you have a P3, and you want to go out and get the procurement and get the P3 on board and have some sort of commercial close and you haven't authorized any federal funds for construction, then you don't need an initial finance plan. But when you get ready to authorize that first federal dollar for construction funds or in the case of TIFIA, right after you close TIFIA, that's when the initial finance plan is required. We've been struggling with this, trying to figure out the best way, do we try to show a specific timeline for P3s or a specific timeline for design-builds and projects these days, they're just so unique and it's just very difficult for us to come up with a standard requirement regarding when initial finance plan be submitted. But if you just keep in your mind that they need to be approved before that first federal funds for construction are authorized then we can work out the details later if you contact the Division Office.

Michael Kay: Great. No other questions in the chat box at the moment. Oh, there's one from Allison. "For a P3, does an agency need to submit a financial plan if all the funds being used are local, nonfederal funds?"

Jim Sinnette: If there is no TIFIA which we consider as federal financial assistance then the answer I think sounds like no, you don't need to do a financial plan if you're not using any federal funds for construction or construction access.

Michael Kay: And Allison notes they are using TIFIA funds.

Jim Sinnette: Okay, so then <laughs> you would need to do a finance plan in accordance with this guide and that would be spelled out in the TIFIA loan agreement.

Michael Kay: And from Diana, "Previously the Center for Innovative Finance Support website reflected one schedule, would it now reflect more than one schedule?"

Jim Sinnette: Yeah, you know, one of the timelines is for design-bid-build projects and then the other one we have for design-build projects. We just posted new timelines on our website yesterday I believe and one of the timeline is for design-bid-build project to show when financial plans, when cost estimate reviews are done and when project management plans need to be submitted. And then we have a second timeline for projects other than design-bid-build and we just try to show when financial plans and project management plans should be submitted in those situations.

Michael Kay: Great, thanks, Jim. So Bill asked a couple of questions that are related. First, "What if the P3s are on FHWA purview assets?" Then he followed up, "What if the P3s are funded using state funding but are located on FHWA purview assets?"

Jim Sinnette: I'm guessing - I'm not familiar with the term purview assets but maybe it's a facility that's been previously funded with federal aid funds and we haven't had that situation. The way the statute defines and the way we've been interpreting it is that if you have no federal funds being used for construction of the project then you don't need to do a financial plan. And again, the TIFIA you do need to do it. And if you had any other sort of financial assistance like PABs or you used GARVEEs or whatever, you would need a financial plan. But we've interpreted it that if you have a project no matter where it's located and you do not use federal funds for construction then you do not need to submit a financial plan.

Michael Kay: Great. And then Allison just clarified that the developer is using TIFIA but the agency is not. I assume that doesn't change the answer from before.

Jim Sinnette: Right, no, but that's a very good point to bring up because there's been some confusion on that. If the developer is using TIFIA then the developer normally prepares its own financial plan to meet TIFIA and major project requirements but if the owner agency is either providing funds, sometimes a developer will get some cash or some funding for their project from the project owner and whether or not they're federal funds, the project owner still has to prepare what we've been calling either a separate financial plan or a supplement to document that the funds that they're providing to the developer can be accounted for. And also, the owner will do construction engineering on the project a lot and they must also prepare either a supplement or a financial plan to document those costs too. So just because the developer is the only one using TIFIA, doesn't mean that the agency doesn't have to provide some sort of financial plan.

Michael Kay: Terrific. And the last one is from Walter. "For programs that have currently approved OINCCS, do these need to be converted to a phased approach if lack of funding was a contributor to the OINCC?"

Jim Sinnette: No, if you have an OINCC, you're good to go unless something changes with the project characteristics, the schedule or whatever. But yeah, if you have an OINCC you're fine.

Contents of the Financial Plan

Michael Kay: Great. Seeing no other questions, Jim, I think we'll move onto the next section on contents of the financial plan.

Jim Sinnette: Okay, and I'll turn that over to LaToya.

LaToya Johnson: All right. Thanks Jim. So we'll spend the next few slides really just walking through the detailed contents that we've outlined as a part of the updated financial planning guidance. A few things to keep in mind as we all walk through the next few slides and the sections of the financial plan is that we really tried to outline the minimum requirements from our perspective, that we understand that oftentimes the financial plans are used for multiple purposes beyond just for meeting the needs of a major project requirements for Federal Highway. So with that said, we understand that there might be some additional information that project sponsors want to provide and report and document as a part of their financial plan. And we definitely don't have a problem with that, we understand that each project, each project sponsor is unique and because of that we try to allow that flexibility that these are the minimum requirements but if additional information needs to be provided, that's definitely okay to do. So as I walk through the sections just keep in mind that we have included a checklist in the updated financial plan guidance, in the previous guidance we did have a checklist. So in attachment B of the new guidance, there's a checklist that walks through each section of the guidance and provides a few bullets of information that we would expect to be provided as a part of the financial plan. So as you're putting together your financial plan, if you just kind of walk through that checklist and make sure that you've addressed all of those bullets or at least have a reason why maybe you didn't have to address those bullets, that would be a good place to start to ensure that you've captured the information that we would expect to be captured as a part of the financial plan.

Slide 15: Financial Plan Sections

LaToya Johnson: So this slide shows the sections of the financial plans. As Jim said, we have the initial financial plan and then we have the financial plan annual update. As a part of the initial plan we've described nine sections. I think most of these are probably familiar, the newest ones or at least the one that is completely new, even new from the interim guidance that have posted for MAP-21 is section five which we've called Financing Issues. And then of course section seven talks about the P3 assessment that was added as a part of the MAP-21 legislation. The financial plan annual update as a part of that we would expect that you will update those firsts nine sections as appropriate to reflect any changes and then you would have four additional sections included as a part of the financial plan annual update. So now I'll walk through each of these sections and try to highlight some of the important and vital information that we would expect as a part of each section separately.

Slide 16: 1. Project Description

LaToya Johnson: So as a part of the project description here, we would expect a concise outline, description of the project scope. And this scope should be consistent with the NEPA document. As Jim said, we defined a major project by what's in the NEPA decision document. So in addition to the description of the scope, we would expect some summary of the environmental decision as well as the environmental process including the date of the approval and the type of environmental documentation that was completed for the project. Also in the project description section, if an OINCC has been approved for the project, this is where you would talk about the OINCC and the scope of the specific OINCC as well as including any maps to visually show the project. I think one thing that is important to remember is that even though this is a Federal Highway requirement and oftentimes Federal Highway or the Division Office are very familiar with the project itself. These financial plans are provided to the public, we have even recommended as a part of this guidance that they would be made available on websites. So it's very important that as a part of the project description using maps and other graphics that it's clear to the reader exactly what the limits of the projects are and what the scope of the project is. Finally, as a part of the project description section, if a phasing plan is presented as a part of the financial plan, this is where you would describe that funded phase, so you would provide a description of the scope of the funded phase of the project separately from the entire project that would have been detailed as a part of the environmental document.

Slide 17: 2. Schedule

LaToya Johnson: Next we would talk about or expect the schedule of the project to be discussed and this is really an outline of the implementation for the project, so you would include any major milestones for completing the project, whether they're procurement milestones, the completion of different sections of phases or segments of the project. And then especially identifying estimated completion dates for the project. So all of those dates should be presented in month and year. I think in the past it wasn't as clear and oftentimes we would have project sponsors that would relate to some type of a state fiscal year or the federal fiscal year. But the expectation just for clarity is that all dates would be provided in month and year. As a part of the schedule section, as a I mentioned, when annual updates are provided in this section the project sponsor should compare the current schedules to the schedules that were represented in the initial financial plan and any previous annual updates. And again, if this has a phasing plan presented it would be expected that the section of the financial plan would clearly show what the completion date is for that funded phase of the project. So I think that last bullet you will see different variations through the rest of this presentation, just trying to outline exactly how the financial plan will be different if a phasing plan is included as a part of the financial plan.

Slide 18: 3. Project Costs

LaToya Johnson: Section three talks about the project cost. And here the project sponsor should present the current estimate of total cost for the project and the remaining cost to complete. So when we say cost for major projects, we are talking about total cost and total cost includes NEPA costs, planning, right of way, construction, construction engineering and other costs, developmental costs as well as delivery costs that were necessary during the delivery of the project. One thing to clarify is that in this section, project cost section, for major project purposes we don't include operating and maintenance cost, so no O&M cost, nor do we talk about financing cost as a part of this section three, project total cost. All costs should be shown in year of expenditure dollars based on inflation or forecasted inflation and project schedules. We would expect a breakdown of cost by major project element and construction segment. So as I've mentioned we would expect cost broken down by different phases of development, right-of-way, planning, construction, et cetera as well as construction segments. So if you have a project that has been divided or separated into five segments for construction purposes, we would expect that the financial plan would detail what is a specific cost for each of those segments of the project. Next, as a part of the initial financial plan is also expected, and here I think we've tried to clarify this as a part of this updated financial plan guidance. But the costs shown in the initial financial plan should be equal or greater than the cost of the 70th percentile amount during the cost estimate review. So we've clearly linked the initial financial plan to a cost estimate review as a part of the updated guidance. And if you have questions about the cost estimate review, we talk about that as a part of the guidance and talk about the expectations, the objectives of the cost estimate review as well as the opportunity that if project sponsors have other types of probabilistic risk assessments that are being done on the project, they may be able to meet the requirements of the Federal Highway cost estimate review. So take a look at that section and hopefully it will provide you any additional information that you may need about the cost estimate review and our expectations for meeting those requirements as a part of the initial financial plan. Next, as the financial plan annual updates are submitted for the project, we would expect that the cost from the initial financial plan in any previous annual updates are compared. And then lastly, if a phasing plan is presented, you would include the current estimate of costs for the funded phase. So just to point out again, the differences with the financial plans that have a phasing plan, as a part of the first three sections that I've just talked about, we talked about a project description and schedule and the project cost, you would talk about the description, the schedule and the cost for the entire project and then you would go into details of the scope, schedule and cost for the funded phase of the project. Now moving into section four, this is where it will begin to differentiate for phasing plans and you'll see that going forward, the information provided in the financial plan would just be focused on the funded phase of the project.

Slide 19: 4. Project Funds

LaToya Johnson: So with that being said, we'll move right along to section four of the financial plan guidance. And here we would expect that all funding sources would be identified, that the financial plan would show dedicated and anticipated funds separately. And when we say dedicated, we mean funds that are identified - clearly identified as a part of the STIP and the TIP and/or as a part of a fiscally constrained long range plan. Anticipated would be any funding that's not a part of a fiscally constrained long range plan or funding that is anticipated to be made a part of the STIP and the TIP as a part of some amendment or modification process. So those are again, dedicated funds that are already shown in the STIP, TIP and fiscally constrained long range plan, where it's anticipated are funds that are either in the process of being put into an updated STIP or TIP or funds that are shown in a long range plan that is not fiscally constrained. For those anticipated funds, the financial plan, we need to evaluate the likelihood of those anticipated funds being available. So if those funds are in the process of being moved into the STIP and TIP as a part of an amendment or modification process you would talk about that process, you would talk about the expectation for that to happen and the likelihood of that being finalized and approved. Next we talk about how the financial plan should not show future discretionary funds as funding. So here we're specifically talking about earmarks, this is not apportion funding, this is earmark discretionary funding and we're saying that unlike in the past, and I think this is not a surprise just with the change in transportation funding over the past few years, we are not comfortable accepting earmarks that have not been approved or future discretionary funding as dedicated and available and committed funds to the project. And that would be true whether we're talking about federal discretionary funding or state and local discretionary funding. Next is the part of the project fund section, it should show a breakdown of the federal, state and/or local funds that are available for the project as well as describing any of the federal funds by the federal aid funding category.

Slide 20: 4. Project Funds (Cont.)

LaToya Johnson: To continue with section four, in this section, you would identify any project funds that are being raised from debt proceeds. So here we're talking about project revenue bonds, TIFIA loans, GARVEE bonds, et cetera. This is where you would clearly show that funding. And then you would include also any special funding techniques such as advanced construction. So as a part of this section, you would talk about the amounts of advanced construction that have been converted for the project so far. This is where you would detail that information. Next, you would address any potential for unexpected changes in the expected funding or potential for anticipated changes in the expected funding. So for example, if there are things or decisions that potentially could be made on the project, almost like a risk to the funding, this is where you would have some of those discussions in the financial plan of what potential changes could be in the future. On the flip side, if there is funding that you think may be available in out years, again, this is where you would talk about the potential of that funding being available. And then lastly, as we've done for each section so far, if a phasing plan is presented as a part of this financial plan, this section should only detail the project funds for that funded phase so you do not need to show funding for the remainder of the project, just for the funded phase. So again, this is where for phasing plans, the financial plan changes but the subject of the information changes from the total project to just the funded phase of the project.

Slide 21: 5. Financing Issues

LaToya Johnson: All right, the next section is section five and this is on financing issues. And as I've mentioned, this is probably the newest section to the financial plan guidance. And as Jim mentioned, this was directly from recommendation that we received as part of a GAO audit on financial plans a few years ago. So the part of this section we would expect the project sponsor to identify the type of financing that is being proposed for the project and then show interest rates and associated fees for the project. And it should present the total finance and cost. A few things to note about this section is that we would expect it to be, or at least this information can be estimated. We know that it's not necessarily expected that at the very beginning of the project, all financing for the project has been worked out in great detail or finalized. So at that point, you can provide estimates for what the project sponsor is planning to do as far as financing and then as the annual updates come in, they should be updated to reflect any final financing decisions that have been on the project. Also, I want to point out that this is probably the section that has the least detail as to what our expectations are. I think the takeaway is that when we review the financial plan, this section should describe what the financing is and give us an estimate of the total financing cost. It's a lot of flexibility I think in the level of detail and exactly how the project sponsor determines is the best way to present that information. So again, we don't have a lot of really good examples of financing issues and financial plans so far on our website so we're really definitely looking to the project sponsors to make this section what it needs to be for their project and for their agency. But just keeping in mind that when we review this section we should have the basic understanding of the type of financing and any estimates for the total financing costs of the project. And then to just wrap up this section, if a phasing plan is presented as a part of the financial plan, then financing costs will only need to be shown for the funded phase of the project.

Slide 22: 6. Cash Flow

LaToya Johnson: The next section is cash flow. And so as a part of this section, the project sponsor is expected to present the annual schedule of cash needs for the project versus the cash available. So really this is just what cash is coming in, what cash is going out by fiscal year or by, yeah, by the annually for the project. And this should be based on the project schedule as well as the information as contained in the fiscally constrained STIP, TIP and long range plan. It's expected as a part of the annual updates that the project sponsor would compare the current cash flow to the cash flow presented in the initial financial plan. So if there are changes it would be a description of what those changes are or what caused those changes. And really it should be, you know, when we review this section of the financial plan, it really shouldn't be any gaps in funding, it shouldn't be any years where it's showing a shortfall or red when you're comparing expenditures versus the cash available for a given project. And then lastly, if a phasing plan is presented then the cash flow should only presented for the funded phase of the project.

Slide 23: 7. P3 Assessment

LaToya Johnson: Section seven speaks to the P3 assessment, and for the purposes of the financial plan guidance, we've defined a P3, a public-private partnership, as "a contractual agreement between a public agency and a private entity that allows for greater private sector participation in the delivery and financing of the project." So in this section, it's really an opportunity for the project sponsor to discuss why or why didn't decide to deliver their project as a P3. So again, whether your project is a P3 or not, whether it's using that type or procurement or not, or contracting method or not, it is expected that you would have a P3 assessment as a part of your financial plan, and in this section you would be expected to briefly describe or cite any legislative authority or the lack of authority; describe the project sponsor's plan to manage the P3 if it has been determined that it'll be delivered using a P3; compare the potential benefits and challenges of procuring the project as a P3 versus the traditional procurement methods; and then summarize the risk allocation for the analysis - what risks would the public sector entity continue to own versus what risks will the private entity take responsibility for as a part of the P3 contract; and then identify market conditions that make the P3 either more acceptable or attractive or, on the flipside, identify any market conditions that maybe don't make the P3 procurement attractive to the project sponsor at this point. So you may talk about industry interests, you may talk about access to capital costs, etcetera. And here I think it's important to point out, again, that this section is not meant for Federal Highway to second-guess the decision of the project sponsor as to whether a P3 should or should not be used for the project. This section is really there to document the determination of the project sponsor to either use or not use a P3. So it should be concise. It's not meant to be - this chapter or section is not meant to be any type of very detailed analysis - it's not meant to be a value-for-money analysis, for example - but really just to provide documentation as to the decision of the project sponsor to either use a P3 or not use a P3. As for phasing plans, as part of the financial plan, the P3 assessment should only be shown for the funded phase, and then consequently, as additional phases or additional scope is added to the funded phase for financial plans that have phasing plans, the P3 assessment would be done on that additional scope. So let's say you know in year three you add scope to the funded phase of the project, then you would have to talk about why for that particular scope for that contract, or what have you, that's been delivered for that scope, why a P3 has been determined to be used or why not. So you would have to update the P3 assessment based on changes to the scope of the funded phase.

Slide 24: 8. Risk and Response Strategies

LaToya Johnson: In section eight we talk about risk and response strategies for the project. So as a part of this section, you would clearly identify significant threats and opportunities regarding the schedule, cost and funding for the project. The risks that were identified as part of the CER should be summarized and updated as appropriate in this section; and then for each of those risks you should provide response strategy - how does the project sponsor plan to address those risks, how will they be mitigated, how will they be - the likelihood of occurrence be minimized if they occur, for example - and then you should show potential risk impacts to the schedule, cost and funding as a part of those sections. So let's say that you've identified a risk that could potentially add additional cost to the project. It should be clear that if those risks are realized that there's a contingency or some type of management reserve fund that has been identified as a part of the cost to cover those risks if they occur. And then finally, as each annual update is submitted, the risk section should be updated. You should talk about if new risks have been identified and added or if existing risks have either been modified or retired as the project continues to progress; and I think that this is an area that as we go forward here at Federal Highway we will be really looking at these risk and response strategies to try and ensure that these are being updated each year to really reflect the issues that the project sponsors are seeing on the project.

Slide 25: 9. Annual Update Cycle

LaToya Johnson: So this is section nine, and this is the last section that is a part of the initial financial plan, and this is on the annual update cycle, and here is where the project sponsor will clearly define what the annual reporting period is for the data in the annual update. So this is what we also call the as-of date of the financial plan and the information in the financial plan. So, often project sponsors will choose the state fiscal year as their reporting date or the federal fiscal year as the reporting date, but we're not necessarily tied to those dates; it's up to the project sponsor as to selecting a reporting date that works for the project and where they can expect annually to have the information they need to update the financial plan. Also as a part of this section you would include the due dates for the next annual update, and we expect financial plans to be submitted to Federal Highway within 90 days after the end of that reporting date. So 90 days after the reporting date the financial plan annual update should be submitted to Federal Highway for review and approval.

Slide 26: 10. Summary of Cost Changes Since Last Year's Financial Plan (AU Only)

LaToya Johnson: So like I said, the first nine are the sections that are part of the initial financial plan, and then we have four additional sections that we expect to be included as a part of the annual update. So the annual updates would update the first nine sections as appropriate, and then you would include these additional four sections, the first of which is the section that summarizes cost changes since the last year's financial plan, and here you would talk about any changes to the project costs and you would discuss the reasons for those changes. So we should have a good understanding, if the project costs increase by 50 million dollars, it should be very clear to the reader as to what were the reasons for that 50-million-dollar change in total project cost. And then as a part of that section, you would also discuss any actions taken by the project sponsor to monitor and control cost growth.

Slide 27: 11. Cost and Funding Trends Since IFP (AU Only)

LaToya Johnson: Section eleven is cost and funding trends since the initial financial plan. So here you would talk about trends that have impacted the project costs and discuss reasons for those trends. So if you've seen an increase in certain materials, then you would talk about that trend and what's going on locally, regionally, globally that is probably causing those increases, for example.

Slide 28: 12. Summary of Schedule Changes Since Last Year's Financial Plan (AU Only)

LaToya Johnson: Section twelve, just as we did for cost, in section twelve you would provide a summary of schedule changes since the last year's financial plan. So you would list the changes to the project completion date and then discuss reasons for those changes. So again, we should have a very clear understanding of why did the completion date change six months, and then talk about actions taken by the project sponsor to monitor and control that schedule growth.

Slide 29: 13. Schedule Trends Since Last IFP (AU Only)

LaToya Johnson: And then lastly, schedule trends since the last initial financial plan. Here you would identify trends that have impacted the project schedule and then discuss the probable reasons for those trends. So if material availability is an issue, then you would outline that's a trend that you have seen on a project, and this is the reason why certain materials have been an issue trying to get on the project, and what may be causing those delays.


LaToya Johnson: So again, those are the 13 sections that we have outlined as a part of the updated financial plan guidance. I've tried to provide a quick overview of those sections, but I would encourage you go back and take a look at the details that we've outlined as well as the checklist that's an attachment that kind of highlights those main areas and the information that we would definitely expect to see as part of the financial plan that you submit. Also, again, I just want to emphasize that these are the minimum requirements. We fully expect that each financial plan may look a little bit different just because of the uniqueness of the project and the project sponsor, but we should be able to open up a financial plan and pull out the information at a minimum that we have detailed today. So with that, I guess, Michael, we can pull up the chat pod and take a few questions.

Michael Kay: Great. Let me just change our view here. Lots of questions. So I'm looking roughly half up from the bottom, from Richard, and we'll start there and proceed down. "What is the preferred timing of the signing of the financial plan certification? With the first draft of the financial plan or with a revised draft addressing FHWA comments?"

Jim Sinnette: We would want a certification submitted with the final initial financial plan or the final annual update after all the comments are resolved.

Michael Kay: Great. Thanks, Jim. From Washington, both the division and state DOT collocated there today, "Does the P3 assessment get updated in the annual updates?"

Jim Sinnette: It does not get updated unless you're changing the phase - if you have a phased financial plan, and your P3 assessment, like for your initial financial plan, should be done on the phased portion, and if for some reason - well, for some reason if you change that phased portion, increasing it, then we would want to see a P3 assessment for that. I suspect it shouldn't be much different than what you did for the first phase, so - but yeah, we would want to see that updated. But if you don't have a phased plan and you did a P3 assessment in the initial finance plan, then there's really no need to change the P3 assessment unless - which I don't see how you could - for some reason you went from a P3 to a non-P3 or a non-P3 to a P3, so.

Michael Kay: And from Alison, "What in the world is an OINCC?"

Jim Sinnette: That's the Operational Independence and Non-Concurrent Construction. It's just easier for us to say OINCC, maybe more fun. That is when you have a NEPA project that is the corridor project that is going to take over 20 years to build, and for the purposes of applying major project requirements you want to separate out that - normally it'd be a corridor project - into distinct sections that are operationally independent, which means they can operate as an efficient facility on their own, but they're non-concurrent, which means that they're looked upon as separate, individual projects. So that's what that OINCC is, and I think the context when you asked that question was in the project description if there's any OINCC findings or approvals, then you'd want to document that in the project description.

Michael Kay: Great. Next question is, "Does section two on the schedule of the initial financial plan need at time of preparation of the financial plan to identify the performance and project date per the new requirements of 2 CFR 200?"

Jim Sinnette: First of all, I must admit I don't know 2 CFR 200. Super circular, oh. Hmm. I have to think about that, but I'll look at LaToya here. We just need the - I mean, what we've done in the past is just the completion date of the project. It's just for our purposes only, it's not to use for any other federal requirement or anything. So it's the completion date of the project is what we look for. I'd have to look at 2 C.F.R 200 to see how that applies here. I don't think it would.

LaToya Johnson: This is LaToya. I don't think it would necessarily apply. However, I think we would leave it up to the Division Office that if there's a difference or the difference is so great between the performance and project date and the completion date maybe that's shown in the financial plan, it may be reasonable to think that Federal Highway would at least ask the question, "What is the difference?" in the two dates.

Michael Kay: Great. Thanks, LaToya. Next question from Diana. "For the purposes of major projects, what if the major project involves several elements, one that will involve a P3 and other elements that will not involve P3s?"

Jim Sinnette: Well, when we think of the P3 assessment, we think of it for the construction portion. So if you're doing a P3 construction project but you're not doing a P3 for right-of-way or utilities or design or whatever, just the P3 assessment should only be for construction. If for some reason part of the construction is a P3 and another part of the construction is not a P3, then I would think we would probably ask for separate assessments, one for the assessment that you're doing the P3 for and one for the assessment that you're not doing the P3 for. We haven't come across that yet. And as LaToya mentioned, this is just the documentation of your thought process, your decision-making process on whether or not to use a P3, so whatever is the most efficient way of showing that documentation will most likely be acceptable for us.

Michael Kay: Great. Next question is, "Do we need to ask any risk analysis documentations for the project costs section?"

Jim Sinnette: You know, all major projects have the CER done, where we identify that 70th percentile cost estimate number, and if that project cost is the same that's shown in the project cost section, then no additional documentation is necessary. However, if that number changes, especially if it changes substantially, and the reason it changed is maybe one of the risks that was identified in the CER that was done maybe a year before the initial financial plan was submitted had changed, then we would want to see some sort of risk analysis that described why that risk either dropped out or reduced in cost, or it increased in cost - the project costs could certainly go up. So yes, if the project cost submitted in the initial finance plan is the same as the 70th percentile number in the CER review, no, you don't need any documentation, but if there's a significant change then you probably do.

Michael Kay: Great. Thanks, Jim. Next question from Blaine. "Shouldn't the schedule also be reported at the 70 percent level? The schedule feeds the cash flow section and major delays would alter the funding burn rate."

Jim Sinnette: That's an excellent point. At this point on our cost estimate review, we don't have a scheduling model that would really - we would feel comfortable showing at the 70th percentile number. But we've had discussions internally should there be some sort of schedule contingency associated with the project, and I guess we would leave that up to the project sponsor and the Division Office to - when you determine the project complete date, if you want to have a schedule contingency in there, which is essentially the 70th percentile number - it represents sort of a contingency - then we would be fine with that. But we don't have any requirements now for a 70th percentile scheduled completion date. But that's an excellent question and that's something that we will have to look at in the future and maybe see if we want to do something like that.

Michael Kay: Thanks, Jim. Next, from Neil. "In the discussion of section two you noted that all dates should be presented as month and year. Are you saying that you want the financial plans to have a monthly basis? For example, do you expect the cash flow analysis to be developed on a monthly basis?"

Jim Sinnette: No, the cash flow analysis could be on a yearly - well, it should be on a yearly basis. The month and date is just as far as completion dates, really. We want to see something to the month and date level of precision. Sometimes in the past we've gotten completion dates that said like the first quarter of 2020 or - so we want something a little more specific than that, and month and year is as specific as you need to be regarding completion dates, and milestone dates, for the schedule.

Michael Kay: Next, from Oklahoma, "What is the current rate of inflation?"

Jim Sinnette: When we do - that's a good question - when we do our cost estimate reviews, we look at the local data. We don't have a specific number that we use. We try to get some local information, and maybe LaToya can help me on this. I don't know if 4 percent or 3 percent is what we've looked at. But we try to get information from the project owner, the state DOT, and determine the inflation that way, and the good thing about it is it's certainly a risk-based approach, so it's not one specific number that we need to put in there.

Michael Kay: And from Washington, both the division and state DOT again, "Do projects with existing financial plans need to include a financing section in their next annual update?"

Jim Sinnette: Yes. Our guidance is effective February 2, and so if there was an annual update submitted after February 2 it should follow the new guidance.

Michael Kay: Great. And from Stephanie, "Our project is close to completion less than two years away. In the email invitation to this webinar it was noted that projects within two years of completion can get an exemption from following the new guidelines. Our project has submitted a few annual updates already and it seems more sensible to keep the format that we have had since we are close to project completion. Can you please explain more on the exemption?"

Jim Sinnette: Actually, that's the first I've heard of the exemption. We haven't created an exemption from the guidance here. But what I would say is for a project less than two years away or a project close to completion, we're not expecting you to go back and completely reformat your annual update to cover the new guidance in the same sections we have. As LaToya mentioned before, what we just want to do is be able to pull out that information that's in the new guidance. I think that the really difference between the new guidance and the existing guidance is really just that financing section. The P3 assessment has been in our guidance for over two years now. The phasing plan, same thing, it's been out there over two years. All of the other stuff that's been updated in the guidance has either been to clarify or to try to get more detail on what we're looking for. It's not really anything new. So like I said, the only thing I can think of that's really significant is the financing section, but we will certainly be flexible with projects that are closing out and not going to require a rewrite or reformatting of the annual updates.

Michael Kay: And from Diana, "As related to the PMP and financial plan, what does this mean to the public project sponsor and the P3 as related to the financial plan? In other words, what if the project under NEPA and as a major project includes elements that will be undertaken by P3 and other elements will be undertaken by the public sponsor?"

Jim Sinnette: So, if you have a major project and you have a P3 doing a portion of it and you have like a state DOT, I assume, doing another portion of the project, they would most likely submit two separate financial plans that have the same reporting date that would provide a complete picture of the overall cost and scope and schedule and all the things in the financial plan guidance for the overall project. So they can be two separate documents, and they most often are, but some coordination would need to be done just to make sure that they provide a complete picture of the overall project, and the public sponsor would sign a separate letter of certification and the concessionaire or the P3 would sign its own separate letter of certification.

Michael Kay: Great. Thanks, Jim. Next from Kim in Wisconsin, "Should the risks identified in the CER be included in detail for all phases or only the funded phase?"

Jim Sinnette: It certainly would be nice to have them for the entire project, but I think it's a good question because if we're really only looking at the funded phase, detailed - <chuckles> - you got me there. I guess the detailed risks can really apply to the funded phase only, but if you have overall program-related risks, like - I can't think - inflation of the risk - that's probably a bad example - but I think overall general program-level risks should be in there for the entire project, but then detailed specific risks, like for a 54-inch pipe culvert that you think has conflicts with utilities or whatever - that should only be for the funded phase.

Michael Kay: Great. Thanks, Jim. We have a couple of comments-slash-questions from Washington State. I can't tell if they're related but I think they may be. Allow me to read them both and then we can kind of take them as you choose. So we have here, "Period of Performance Provision - that's 2 CFR 200.309 - this is a significant change to the Federal Aid Highway Program because it will impose a period when project costs can be incurred which includes a project agreement start and end date. Current Federal Aid regulations stipulate that costs can only be incurred after the authorization data of a project unless otherwise authorized under 23 CFR 1.9 subsection B. The new provision will require an end date to be included in the agreement, after which no additional costs may be incurred and are not eligible for reimbursement. For existing financial plans for projects that will go longer than two additional years, are you looking for a total reformatting of the existing report, or just to incorporate the new or additional information within the existing report used for previous annual updates?"

Jim Sinnette: I think those are two separate issues there, and I'll go over the first one. I'm not really familiar with 2 CFR 200.309 and knowing how Federal Highway's going to implement that. But what I would say is the dates in the financial plan are reporting dates. I don't know if they would be used for 2 CFR 200.309. It'd be nice to be some consistency, as LaToya mentioned, and if there's any significant changes between the two dates - the completion date in the finance plan and whatever comes up with this project agreement under 200.309 - yeah, that's something I guess we'll have to look into and make sure that we're consistent with how Federal Highway's going to implement that period of performance provision. Yeah, I mean, no, we're definitely not looking for a total reformatting of the existing reports. Just whatever the best way to incorporate the new additional information in the existing format is perfectly fine with us.

Implementation of Financial Plan Guidance

Michael Kay: I don't see any other questions in the chat box and haven't seen any for a bit, so I think with that we can move on to Implementation of the Financial Plan Guidance.

Slide 31: Expectations of Project Sponsor

Jim Sinnette: Okay, thank you. This is just briefly to go over the expectations of, like I said earlier, the sponsor, the Division Office and the Headquarters Office here. Again, like I said, we're expecting the financial plans now to be submitted in accordance with the new guidance, as we mentioned before, within 90 days - annual updates should be submitted within 90 days of the end of the reporting period. A signed certification should be submitted with the final submission of the initial finance plan and each annual update. Especially on - well, if you have a question, period - but on the other projects other than design-bid-build, it just really - it seems to go better if we're able to talk with the project sponsor beforehand and we can - we have some strategies. We've seen a lot of finance plans and annual updates submitted, so if there's any questions we can talk about some strategies that the project sponsor may want to consider to make the submission of the financial plan efficient and - we certainly don't want project sponsors to spend a lot of time preparing a financial plan if there's ways of doing it quicker and more efficiently. So feel free to contact us anytime during the process. We've had project sponsors submit financial plans years in advance of the project just to get our input on it, and we're more than happy to do that.

Slide 32: Expectations of FHWA Division

Jim Sinnette: The divisions - we count on the divisions to keep track of the schedule and make sure that the initial financial plans and especially the annual updates are submitted according to the schedule. We look for the divisions to coordinate the communications between headquarters and the project sponsor with respect to comments. Project sponsors should be contacting the divisions and not us directly, if there's any questions about a project. All the communication should be going through our Division Offices. And again, when we review the financial plan with the division for review, we count on them to look at the guidance and make sure it meets the guidance, and there's some specific things that because they're on the ground, they're there where the project's occurring, that we look for them to make sure that the scope is consistent with the NEPA documents, the decision document. We count on them to verify the progress that's reported in the updates. We count on the Division Offices to look at the STIP, TIP and long-range plans and make sure that information as presented in the financial plan and annual updates are good. And then advanced construction information, we of course count on the divisions for that, and then the divisions are the ones that provide the approval to the project sponsor.

Slide 33: Expectations of FHWA HQ

Jim Sinnette: And then here in headquarters, we also look at it to make sure it meets the financial plan guidance. We track the schedule and cost data. There's some sections in there about schedule and cost and why the data changes between annual updates and with the initial financial plan. We're required to report to Congress on the progress of major projects each year and our executive leadership is very interested in this data, and oftentimes we have to provide information to them and to requests from the Hill, from Congress on the Hill, regarding major projects. So that's why that's in there. Certainly we coordinate comments with the divisions and we're willing and more than happy to participate in calls to go over the resolution of the comments. We provide an email concurrence to the division and they have that before they provide the approval to the project sponsor. We also monitor the timing of annual update submittals to make sure that all the projects are up to date. And when there's TIFIA projects, our office will coordinate with the TIFIA Joint Programs Office for review of financial plans.

Slide 34: Financial Plan Resources

Jim Sinnette: Here are some links. The guidance is on our Federal Highway's intranet site at this location. The Federal Register Notice is also linked, and that is where we responded to comments on the draft guidance. We had posted the draft guidance in the Federal Register requesting comments and we did receive some good comments, and so our responses to those comments are in the Federal Register Notice. And then we have some financial plan examples. Again, we asked the states, the project sponsors and the Division Office if we could post them because we thought they were good examples of financial plans, so feel free to look at those and you'll get an indication of the types of detail we're looking for and I think you'll find that they're all not prepared exactly the same way and there is flexibility in how you can prepare your financial plans.

Slide 35: Major Project Timeline - DBB

Jim Sinnette: We talked a little earlier about timelines, and this is the design-bid-build timeline that's on our website. It shows when cost estimate reviews and financial plans are submitted - probably very difficult if not impossible to read here, but you can download it from the "Materials to Download" site as a PDF file and, again, it's on our website.

Slide 36: Major Project Timeline - DB/P3

Jim Sinnette: And then this is the other one for projects that are not designed design-bid-build, design-builds, or P3s.


Jim Sinnette: So I guess, maybe Derek, if you could give people an opportunity to call in and ask some questions, and then after that, in the meantime, we'll look at some chat pod questions.

Operator: Ladies and gentlemen, if you wish to ask a question, please press star then one on your touchtone phone. A voice prompt on your phone line will indicate when your line has been opened. You may remove yourself from the queue at any time by pressing the star key followed by the digit two. If you're using a speakerphone, please pick up the handset before pressing the corresponding digits. Once again, please press star-one at this time.

Michael Kay: Great, thanks. And while we're waiting for any phone questions to come in, we will take - I see one question came in from Blaine. "Is the 90 days for submission of the draft or the signed final?"

Jim Sinnette: Oh, I think we're thinking this is the annual update, do you need to submit it within 90 days of the reporting date, whether you can submit the draft or it has to be final within 90 days. The first submission should be within 90 days, so that could be the draft submission.

Michael Kay: Great. Derek, do we have any questions in the phone queue?

Operator: We currently have no phone line questions at this time, but as a reminder, that is star-one on your telephone keypad for questions.

Conclusion and Additional Q&A

Michael Kay: Do we want to conclude the presentation first, Jim, and then maybe we can take any additional questions that come up? I just want to make sure we get to these last couple slides, with information about the webinars and contact information.

Slide 38: Upcoming Major Project Webinars

Jim Sinnette: Okay, yeah, we can do that. We have a major project webinar two times a year - we do it four times, quarterly webinars with FHWA staff - but two times a year we have it with state DOT staff and our project sponsors and external partners, and the next one is Tuesday, May 5 from one thirty to three thirty. Everyone's invited, and it's just to go over major project issues that are trending, and sometimes it's talking about case studies, sometimes it's trying to figure out better ways to do things. So if you have any topics that you think should be discussed, or do you want to present something on your present, talk about a success you've had or one time we had a presentation about lawsuits, so we're looking for good things and bad things that we can all learn from, and if you have any ideas, given LaToya Johnson a call or an email, and she can also tell you how to register for the Tuesday, May 5 webinar. And I believe that's it from our end, Michael.

Slides 39-40: Contact Information

Michael Kay: Yep, just wanted to share your contact information, Jim, and that's also in the presentation download, and then Dana Williams, the Outreach and Communications Specialist in the Office of IPD, if you have any questions regarding webinars in general. What I'll suggest we do now - and we'll get to the question that's in the chat box, I assure you - but I did want to open up our evaluation layout. We can kind of do this concurrently. We can take the additional questions and allow you to fill out an evaluation. So let me just orient you real quick. On the top left we have a question for you to enter a short answer. "What types of additional financial plan training or resources would you like FHWA to provide?" And then occupying a majority of your screen is just a quick nine-question survey. It helps us understand how this webinar went for you, what we could have done better, and most importantly, there's an open-ended question at the very end and we'd appreciate any feedback you may have.


Michael Kay: I did want to get to the question in the chat box. "Does the financial plan require only for a mega project? Please advise."

Jim Sinnette: I think the question, yeah, is when are financial plans required. Annual financial plans are required - and this is by statute - for all major projects - we call them major; a lot of people refer to them as mega projects - but for all major projects - and major projects are projects that have a total estimated cost of 500 million dollars or more - and those financial plans are required to be submitted to Federal Highway Administration for review and approval. In addition, Federal Highway can also designate other projects as major projects even though they don't meet the 500-million-dollar threshold. We rarely do that. I think in the past ten years we've only done it once, so - not to say we won't do it again - but it's a very unique situation. In that case, financial plans would be required from those projects, would be required to be submitted to Federal Highway for review and approval. There are other projects that - again, defined in statute - that have a cost be 100 million and 500 million, and financial plans are required for those projects but they are only to be submitted to the Federal Highway Administration for review and approval upon request by the Division Office. So it's up to the Division Office to decide if they want to review financial plans from project sponsors for projects between 100 and 500 million.

Michael Kay: Great. Thank you, Jim. Derek, do we have any questions in the phone queue?

Jim Sinnette: Sorry, I just wanted to make one other addendum to that, is any TIFIA project requires a financial plan and annual update. So some TIFIA projects could be less than 500 million dollars, and it doesn't even have to be a highway project, it could be a transit project, and they require financial plans and annual updates.

Michael Kay: Great. Derek, do we have any phone questions?

Operator: We have no phone line questions at this time.

Michael Kay: Okay. Well, I think we've exhausted the majority of the chat pod questions, so I'll leave it up to you, Jim and LaToya. Do we want to conclude at this point? Do you have any concluding remarks for us? Oh, and there's one. I want to make sure to get to Clint's question real quick. "Our environmental cleared project is approximately 3 billion dollars. We have a draft PMP and are beginning the financial plan. The project is now planning to prepare an OINCC. Under the OINCC, each phase is 500 million." Okay, he's doing it in piecemeal here, so we'll follow along. "Do we still need the financial plan?"

Jim Sinnette: Well, if you have an OINCC that's over 100 million and under 500 million, and it's an approved OINCC, then yes, you have to do a financial plan for it. It's up to the Division Office to determine if they want to review it for approval, and the Division Office could say they want to review all financial plans between 100 and 500 million, they can decide that they want to do a random sampling, or they could decide not to review it at all. It's really up to the divisions and their stewardship and oversight discussions with the state DOT. But yeah, you still need to do the financial plan, but it may not need to be submitted.

Michael Kay: Great.

Jim Sinnette: It looks like there's one more.

Michael Kay: Yep, I see that. "If it's 300 million dollars from Federal Highway, 300 million from FRA, do we still need a financial plan?"

Jim Sinnette: If the total cost is more than 500 million dollars and there's even one dollar from Federal Highway, it's federal assistance, then you need to do a financial plan. It's considered a major project. There's no threshold; it's any project costs you 500 million dollars that receives any amount of federal financial assistance is a major project. And again, that federal financial assistance could be TIFIA.

Michael Kay: Great. Jim and LaToya, I'll turn it back over to you for any thoughts or concluding remarks.

Jim Sinnette: I just want to thank everybody and if there's any questions afterwards, feel free to email me or LaToya with the questions or give us a call. We appreciate everybody attending and your support. LaToya, any - ? But yeah, I guess we're done here. Oops, one more.

Michael Kay: Yeah, one more. From Diana, "Please clarify. If you have one PMP under major projects but the OINCC is under 500 million, but the overall financial plan includes TIFIA, TIGER, and other federal, state and local funds, what is required?"

Jim Sinnette: If you have - when we look at OINCCs, we look at the OINCC project for the purposes of determining whether or not a financial plan and a project management plan is required. So if you have an OINCC under 500 million and that portion of the OINCC has - or that OINCC itself has federal assistance, then a financial plan is needed if it's 100 million dollars or more but may not be needed to be submitted for review and approval to the division.

Jim Sinnette: But it includes TIFIA. If TIFIA is part of the OINCC, then you have to do a financial plan for review and approval. If TIFIA is part of the portion of the project that's outside the OINCC limits, then you may not have to do a financial plan for - probably the best thing to do is to submit the specific details and then send an email to LaToya and I and we can provide a better answer. There's lots of moving parts in this question and lots of stuff going on here, and we don't want to mislead you in the answer. But the overall philosophy is if you have a project, whether it's defined by an OINCC or a NEPA document, and it has one dollar of federal financial assistance, whether it's TIFIA or federal aid, and it's over 500 million dollars, then you have to submit a financial plan for review. If you have any project that has TIFIA funds, then you have to submit a financial plan for review and approval.

Michael Kay: All right. Well, I don't see anybody typing. If you have any last-minute comments, please get them submitted in the next, literally, 15 seconds. Otherwise I think, with that, we can conclude, and I want to thank everybody and hope everyone has a really great afternoon.

Jim Sinnette: Thank you, Michael. Thanks everyone. Thanks, Derek.

Operator: That concludes our conference for today. Thank you for participation and for using AT&T teleconference service. You may now disconnect.

Updated: 06/27/2017
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