FTA Oversight Procedures - Federal Transit Administration - U.S. ...
FTA Oversight Procedures - Federal Transit Administration - U.S. ... FTA Oversight Procedures - Federal Transit Administration - U.S. ...
degree of understanding among the parties involved, of uncertainties in quantifications of the risks. o Estimation of the expected value of the risk, including reasonable compensation for profit as compensation for risk acquisition (the “risk neutral point” or “neutral point”). It shall be assumed that competitive, market‐based pricing defines the risk neutral point as such compensation or pricing that neither contributes to nor detracts from the third party’s risk liability and indirectly, the Grantee’s overall project risk. The PMOC shall assume that 4% represents a profit or fee that is at the neutral point. o Estimation of the difference between the anticipated negotiated compensation for risk acquisition and the equivalent neutral point. Such difference shall be expressed as the ratio of the difference between the neutral point and the proposed compensation amount, divided by the neutral point. This ratio is herein called the transfer rate. Transfer rates above 75% represent an increasing potential for third‐party risk acceptance and a decreasing amount of Grantee risk sharing, as well as requiring less of an explicit description of allocated risk. Transfer rates over 75% are to be considered as increasingly effective but offering less value to the Grantee. Transfer rates below 75% of the risk’s expected value represent a potential increasing amount of risk to third parties and a potential of unexpected retained risk by the Grantee, perhaps indicating some ineffectiveness of the risk allocation. This potential for increased Grantee risk may arise from construction case law precedent and may be unrecognized or undisclosed by project participants. Transfer rates below 25% are to be considered ineffective. As appropriate, the PMOC shall make recommendations to achieve a more effective risk allocation strategy, to develop more effective negotiations for allocated risks, or to otherwise improve the value added by choice of project delivery method. 7.0 REPORT, PRESENTATION, RECONCILIATION 7.1 Cost and Schedule Contingency Reports Unless otherwise directed by the FTA, the delivered Spot Report will be sectioned as follows: Executive Summary Unless otherwise directed by the COTR/TOM, not to exceed 3 pages. Project Background Project descriptions and data shall be consistent with the Monitoring report guidance, current monitoring OP 35 Project Contingency and Contract Package Review Revision 0, June 2008 Page 7 of 10
eport and the most recent FTA New Start profile. Notwithstanding the foregoing, the task order manager or COTR may direct the PMOC to use an identifiable draft version of these materials. Review and Analysis of Project Contingency Conclusion Recommendations • Scope Review checklists for design and construction reviews. • Recommendations for Conditional Approval to Enter PE/FD • Recommendations for Project Development Agreement/FFGA. Appendix A: Grantee Project Data This section shall identify and characterize the Grantee’s structure and quality of the Grantee’s project data reviewed for the spot report or other deliverables. The intent is to determine the extent, nature, detail and quality of the Grantee project data and the steps the PMOC took to determine its value. The PMOC shall identify, and discuss Grantee or third party data it accepted without adjustment. Appendix B: Methodology The purpose of this section is to describe the PMOC’s methodology. Include other appendices as necessary or directed. 7.2 Contractual Risk Allocation Report Unless otherwise directed by the FTA, the delivered report will be sectioned as follows: Executive Summary Unless otherwise directed by the task order manager or COTR, not to exceed 3 pages. Project Background Project descriptions and data shall be consistent with the Monitoring report guidance, current monitoring report and the most recent FTA New Start profile. Notwithstanding the foregoing, FTA may direct the Contractor to use an identifiable draft version of these materials. Sub sectioning shall also include Guideway Components, Project Delivery Method, inclusive of the proposed Contract Packaging Strategy, and, as applicable, Master Planning for the Corridor. Review and Analysis of Contract Package Level Cost Mapping The first subsection shall identify and characterize the subject contract package pricing/compensation into cost accounting categories such as subcontracted direct costs, contractor direct labor, direct material, direct equipment, field and home office overheads, project contingency, engineering, construction OP 35 Project Contingency and Contract Package Review Revision 0, June 2008 Page 8 of 10
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degree of understanding among the parties involved, of uncertainties in<br />
quantifications of the risks.<br />
o Estimation of the expected value of the risk, including reasonable compensation for<br />
profit as compensation for risk acquisition (the “risk neutral point” or “neutral<br />
point”). It shall be assumed that competitive, market‐based pricing defines the risk<br />
neutral point as such compensation or pricing that neither contributes to nor detracts<br />
from the third party’s risk liability and indirectly, the Grantee’s overall project risk.<br />
The PMOC shall assume that 4% represents a profit or fee that is at the neutral point.<br />
o Estimation of the difference between the anticipated negotiated compensation for<br />
risk acquisition and the equivalent neutral point. Such difference shall be expressed<br />
as the ratio of the difference between the neutral point and the proposed<br />
compensation amount, divided by the neutral point. This ratio is herein called the<br />
transfer rate.<br />
Transfer rates above 75% represent an increasing potential for third‐party<br />
risk acceptance and a decreasing amount of Grantee risk sharing, as well as<br />
requiring less of an explicit description of allocated risk. Transfer rates over<br />
75% are to be considered as increasingly effective but offering less value to<br />
the Grantee.<br />
Transfer rates below 75% of the risk’s expected value represent a potential<br />
increasing amount of risk to third parties and a potential of unexpected<br />
retained risk by the Grantee, perhaps indicating some ineffectiveness of the<br />
risk allocation. This potential for increased Grantee risk may arise from<br />
construction case law precedent and may be unrecognized or undisclosed by<br />
project participants.<br />
Transfer rates below 25% are to be considered ineffective.<br />
As appropriate, the PMOC shall make recommendations to achieve a more effective risk<br />
allocation strategy, to develop more effective negotiations for allocated risks, or to otherwise<br />
improve the value added by choice of project delivery method.<br />
7.0 REPORT, PRESENTATION, RECONCILIATION<br />
7.1 Cost and Schedule Contingency Reports<br />
Unless otherwise directed by the <strong>FTA</strong>, the delivered Spot Report will be sectioned as follows:<br />
Executive Summary<br />
Unless otherwise directed by the COTR/TOM, not to exceed 3 pages.<br />
Project Background<br />
Project descriptions and data shall be consistent with the Monitoring report guidance, current monitoring<br />
OP 35 Project Contingency and Contract Package Review<br />
Revision 0, June 2008<br />
Page 7 of 10
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