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10 September 2009
[Federal Register: September 10, 2009 (Volume 74, Number 174)]
[Proposed Rules]
[Page 46515-46521]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10se09-11]
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DEPARTMENT OF TRANSPORTATION
Federal Transit Administration
49 CFR Part 633
[Docket No.: FTA-2009-0030]
RIN 2132-AA92
Capital Project Management
AGENCY: Federal Transit Administration (FTA), DOT.
ACTION: Advance notice of proposed rulemaking; request for comments.
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SUMMARY: In an effort toward greater transparency and to ensure
integrity in public investments, FTA today publishes an advance notice
of proposed rulemaking on capital project management. The Federal
Transit Administration (FTA) is considering a revision of its Project
Management Oversight (PMO) rule, shifting its focus from project
oversight only to project management and oversight. A revised Part
would more clearly identify necessary project management skills needed
to be demonstrated by project sponsors for all fixed guideway capital
projects, as well as additional requirements that would apply only to
the more complex major capital projects, and distinguish project
characteristics that would require documentation of project plans and
implementation strategies in a project management plan, as well as the
use of FTA's Project Management Oversight Contractors (PMOCs).
Beginning the rulemaking process to update its project management rule
will aid some key agency priorities. It will help ensure integrity and
accountability in its construction grant programs, and it will provide
data the agency can use in its efforts to streamline its discretionary
capital project approval process. FTA seeks to elicit a broad array of
comments from project sponsors, the industry, other stakeholders, and
the public on a number of subjects.
DATES: Comments must be received by November 9, 2009. Late-filed
comments will be considered to the extent practicable.
ADDRESSES: You may submit comments identified by the docket number
(FTA-2009-0030) by any of the following methods:
Federal eRulemaking Portal: Go to www.regulations.gov. Follow the
online instructions for submitting comments.
U.S. Mail: U.S. Department of Transportation, Docket Operations,
West Building, Room W12-140, 1200 New Jersey Avenue, SE., Washington,
DC 20590.
Hand Delivery: U.S. Department of Transportation, Docket
Operations, West Building, Room W12-140, 1200 New Jersey Avenue, SE.,
Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday,
except Federal holidays.
Fax: (202) 493-2251.
Instructions: You must include the agency name (Federal Transit
Administration), and docket number (FTA-2009-0030) or Regulatory
Identification Number (RIN 2132-AA92) for this rulemaking at the
beginning of your comments. All comments received will be posted,
without change and including any personal information provided, to
www.regulations.gov and http://dms.dot.gov, where they will be
available to internet users. Please see the Privacy Act.
You should submit two copies of your comments if you submit them by
mail. If you wish to receive confirmation that FTA received your
comments, you must include a self-addressed, stamped postcard. Due to
security procedures in effect since October 2001 regarding mail
deliveries, mail received through the U.S. Postal Service may be
subject to delays. Parties submitting comments should consider using an
express mail firm to ensure the prompt filing of any submissions not
filed electronically or by hand.
For access to the DOT docket to read materials relating to this
notice, please go to http://dms.dot.gov at any time or the Docket
Management System.
FOR FURTHER INFORMATION CONTACT: For program questions, please contact
Aaron C. James, Sr. at (202) 493-0107 or aaron.james@dot.gov, or Carlos
M. Garay at (202) 366-6471 or carlos.garay@dot.gov. For legal
questions, please contact Jayme L. Blakesley at (202) 366-0304 or
jayme.blakesley@dot.gov. The principal office of FTA is located at 1200
New Jersey Avenue, SE., Washington, DC 20590. Office hours are from
8:30 a.m. to 5 p.m., Monday through Friday, except Federal holidays.
SUPPLEMENTARY INFORMATION:
I. Introduction, Background, and Purpose
A. Introduction
B. Background
C. Purpose of This ANPRM
II. Applicability
A. Fixed Guideway Capital Project
B. Major Capital Project
C. Questions
III. Principles and Requirements for Fixed Guideway Capital Projects
A. Fixed Guideway Capital Projects
1. Technical Capacity and Capability
2. Satisfactory Continuing Control
3. Maintenance of Facilities and Equipment
4. Financial Plan
5. Grant Project Description, Budget and Milestones
B. Major Capital Projects
1. Technical Capacity and Capability
2. Project Management Plan (PMP)
3. Project Implementation
4. Performance Requirements
5. Reporting
6. Exceptions for Past Performance
C. Questions
IV. FTA Oversight of Fixed Guideway and Major Capital Projects
A. Fixed Guideway Capital Projects
B. Major Capital Projects
1. Roles and Responsibilities
2. Risk-Informed Project Management Oversight Approach
C. Questions
I. Introduction, Background, and Purpose
A. Introduction
In this Advance Notice of Proposed Rulemaking (ANPRM), and to
ensure integrity in its public investments through transparency and
accountability, FTA begins the process of revising its Project
Management Oversight rule at 49 CFR Part 633. The end result would be a
Project Management rule governing all FTA-funded fixed guideway capital
projects as well as additional requirements for major capital projects,
emphasizing a set of standards and principles for sound project
management. Specifically, FTA seeks to restructure the current Part 633
to incorporate the best practices in the transit industry with respect
to reasonable project performance measures. When final, this project
management rule should articulate the criteria and skills expectations
necessary to assure a project sponsor's successful implementation of a
fixed guideway capital project, including a major capital project. The
new Part 633 also would be updated to reflect
[[Page 46516]]
oversight tools and methodologies that have been developed since the
original rule went into effect.
Updating its project management rule at this time will aid FTA as
it also considers streamlining its discretionary capital construction
program. FTA seeks to establish methods that help ensure integrity and
accountability in its capital grant programs before simplifying its
competitive construction grant programs.
As a first step in this rulemaking process, and in the spirit of
openness and transparency, FTA is publishing this ANPRM to get as broad
input as possible before developing a Notice of Proposed Rulemaking.
This ANPRM presents ideas and concepts and solicits comments and
suggestions on FTA's proposed requirements that are meant to help
ensure that grantees deliver capital projects on time, within budget,
and with the promised scope, while assuring a quality product and the
safety and security of the riding public. This ANPRM does not seek to
alter existing New Starts guidance previously published by FTA but
instead to enhance engineering and project management aspects of all
major capital projects. Through this ANPRM FTA seeks to obtain the
views of its project sponsors, the industry, other stakeholders, and
the public on a number of subjects related to project management and
project management oversight.
B. Background
FTA awards over $10 billion annually for the purchase of all sizes
and types of public transportation rolling stock, as well as the
construction, rehabilitation, maintenance, and improvement of public
transportation facilities and systems throughout the United States.
Fixed guideway capital projects, including those traditionally defined
as major capital projects, reflect significant investments by FTA, and
typically are the largest and most challenging projects sponsored by
FTA grantees.
FTA (as the Urban Mass Transit Administration (UMTA)) issued the
original Project Management Oversight (PMO) rule on September 1, 1989,
49 CFR Part 633 (54 FR 36708). This rule prescribed the standards
necessary at that time to carry out the responsibilities of UMTA's
Project Management Oversight Contractors (PMOCs) program; set forth
basic requirements for project management plans for major capital
projects; and implemented section 324 of the Surface Transportation and
Uniform Relocation Assistance Act of 1987, that permitted UMTA to use
up to \1/2\ of 1 percent of the funds available in each fiscal year for
the agency's capital programs for project management oversight of major
capital projects. At the time the original rule was published, FTA's
annual program was less than $3 billion, and the PMO program had in
effect 25 task orders for Project Management Oversight Contractors.
The basic oversight framework at 49 CFR Part 633 has served the
agency well, focusing on the assignment of project management oversight
contractors to major capital projects and requiring project sponsors to
develop a comprehensive project management plan (PMP) to guide the
planning and implementation of their major capital projects. The PMPs,
combined with the PMOC deliverables have been critical to FTA for
evaluating whether a project sponsor has the technical capacity and
capability to execute a major capital project, verifying that projects
proceed within schedule, scope, and budget, and mitigating problems as
they arise.
Today, the dollar value of the Federal transit program has tripled,
and the number of active PMOC task orders has doubled, indicating
several things. First, there has been a significant increase in local
decisions to invest in public transportation. Second, there has been a
proliferation of project sponsors of major capital projects and an
emerging need for more specific and systematic expectations for the
industry in executing these types of projects. Third, FTA is
participating in a larger number of ``mega projects''--projects of a
total cost of $1,000,000,000 or more--which entail unique challenges to
the agency as the steward of Federal tax dollars. Further, FTA research
into the factors contributing to cost escalation in capital projects
indicates that in many instances cost increases resulted from lack of
management capabilities or project controls at the sponsor level.
Given the growth of the program, as well as the increasing number
of relatively inexperienced transit agencies now seeking to execute
complex infrastructure construction projects, FTA seeks to broaden the
scope of its project management rule to include performance
expectations for project sponsors seeking financial assistance in
building major capital projects with significant FTA investment.
C. Purpose of This ANPRM
The purpose of this ANPRM is to provide general information about
the direction, scope, and content of a possible revision to FTA's
project management oversight rule contained in Part 633 of its
regulations, and to seek answers to questions that will help the agency
make decisions about the appropriate direction to take in its future
rulemaking. Ultimately, this rulemaking will help improve grantees'
project delivery success rate by establishing an effective regulatory
framework for the management of project scope, schedule, cost, and
quality for all fixed guideway projects. The overriding goals of this
ANPRM and any subsequent rulemaking are to encourage grantees to apply
more effective means of project management and for FTA to provide more
effective oversight to its grantees and guidance to its PMOCs.
With this ANPRM, FTA seeks comment and suggestions for alternative
approaches on the specific topics discussed below that may be the
subject of a proposed and final rule, including its applicability, the
definition of ``major capital project,'' the technical capacity and
capability of project sponsors, the use of project management plans,
requirements for successful implementation of fixed guideway capital
projects, and FTA's project management oversight process.
II. Applicability
Anticipating a new project management rule generates several
questions pertaining to the scope and applicability of the rule--i.e.,
what types of projects or project sponsors should the rule apply to and
what aspects of project management should be subject to the more rigid
requirements of a rule. FTA seeks comments on the approach described
below. This approach would define two categories of projects--fixed
guideway capital projects and major capital projects--with greater
oversight being applied to major capital projects. We would apply
`baseline' competencies/skills requirements to all fixed guideway
capital projects funded under the discretionary and formula programs at
49 U.S.C. 5309(b)(1) and (b)(2), based principally on the statutory
requirements, with some focus on non-statutory areas that agency
experience has identified as impediments to timely execution of fixed
guideway grants. More extensive demonstrations of technical skills and
project management expertise would be required for projects categorized
as major capital projects under the new regulation.
A. Fixed Guideway Capital Project
A fixed guideway capital project would include any project funded
with section 5309(b)(1) or (b)(2) funds. This would include all New
Starts projects, Small Starts Projects (including Very Small Starts),
and Fixed Guideway
[[Page 46517]]
Modernization formula projects. However, projects that also fall within
the category of a major capital project would be subject to the more
detailed requirements outlined below.
The fundamental distinction between a fixed guideway capital
project and a major capital project are complexity, scale, and
experience of the project sponsor. For example, some grants, despite
exceeding $100 million, may only be for a single purpose, such as
running rail and rail ties. Thus, even though this grant may have a
very large dollar value, the necessary elements of a high risk capital
project (i.e., interdependent parts, schedules, resources, and
finances) do not exist. On the other hand, there are circumstances in
which a series of fixed guideway modernization improvements, which
individually might be under $100 million, would be managed together as
a single investment with interdependent parts, thus falling within the
definition of a major capital project.
Conversely, another project might qualify as a major capital
project but be treated simply as a fixed guideway capital project
because of certain characteristics that indicate lower risk. For
instance, a small starts project or extension of a small start,
executed by an experienced grantee, using the same technology and
veteran in-house staff that had completed a previous project on time
and on budget would represent a higher probability that it already has
the requisite management skills to complete the new project on time and
on budget.
Regardless of the project specifics, a defined baseline of
technical skills and products would apply to all fixed guideway capital
projects, and are discussed in more detail below. In particular, FTA
seeks comments and suggestions on exactly what baseline products and
skills demonstration should be applied to all of these projects.
B. Major Capital Project
A major capital project would include the following types of fixed
guideway capital projects: (1) New fixed guideway construction or
extension of an existing fixed guideway at any cost, but for which the
project sponsor seeks $75 million or more in Section 5309 New Starts
funds; or (2) fixed guideway construction, reconstruction,
rehabilitation or modernization with a total project cost of $100
million or more, using funds under 49 USC section 5309(b), that
identifies a set of activities and tasks that are interdependent to
accomplish a specific objective with specific time, cost, and
performance constraints; or (3) a project that the Administrator finds
would benefit from the FTA project management oversight program, or
presents certain characteristics that indicate the project would
benefit from enhanced project management, engineering, and
documentation of plans and processes. FTA seeks comment on what
criteria it should use to determine whether a fixed guideway project
should also be classified as a major capital project.
C. Questions
1. Is the distinction between a fixed guideway capital project and
a major capital project clear enough? Please provide detail about how
you would define any of the terms differently. Please explain your
rationale.
2. Are there other characteristics--for either project category
above--you believe should be called out? What are they and why?
3. Should a Project Management rule contain provisions that apply
to non-fixed guideway capital projects, for example, bus projects under
section 5309(b)(3)? Should the rule apply to projects above a certain
dollar threshold only?
4. Under consideration is an expanded list of circumstances under
which the Administrator could designate a project a ``major capital
project'', triggering additional skills demonstration and process
planning and project implementation documentation. A list of examples
follows. Please provide your opinion and regarding whether FTA should
consider the following criteria for designating a project as a major
capital project:
The project sponsor has limited experience in design,
construction, rehabilitation, or modernization of fixed guideways;
The project sponsor has a history of exceeding project
budget or schedule targets on other fixed guideway capital projects;
The project involves acquisition, maintenance, or
rehabilitation of vehicles or rolling stock that is not routine for the
sponsor;
The project is of significant expense or unique complexity
for the sponsor;
The success of the project will depend upon the sponsor's
timely transaction of third-party agreements;
The project involves new technology, design or
construction elements that increase risk to the project cost or
schedule.
III. Principles and Requirements for Fixed Guideway Capital Projects
A. Fixed Guideway Capital Projects
Following is a description of the existing baseline requirements
for fixed guideway capital projects and how FTA proposes to modify the
requirements.
1. Technical Capacity and Capability
By law, before FTA can award grant funds for a capital fixed
guideway grant, the project sponsor must certify, consistent with 49
U.S.C. 5309(c)(1)(B), that it ``has or will have the legal, financial,
and technical capacity to carry out its proposed program of projects,
including safety and security aspects of that program'' throughout the
life of the project. In many cases, FTA accepts the annual
certification of the project sponsor as sufficient evidence that it
possesses adequate technical capacity and capability. In some
instances, however, FTA has reason to question the sponsor's technical
capacity to manage the scale, expense, or complexity of the proposed
project, thus, FTA must make an independent assessment of the sponsor.
Through this rulemaking, FTA expects to set specific performance
standards for technical capacity and capability. When assessing
technical capacity, FTA may consider the results of its routine
oversight reviews. Recurring and specialized reviews give FTA an
opportunity to verify the grantee's Certifications and Assurances (see
Circular C 5010.1D, Chapter II.3, Responsibilities of Grant
Management). In cases where FTA finds that a project sponsor's
certifications are inaccurate, FTA may withhold grant approval until it
can verify the accuracy of the sponsor's certifications.
Technical capacity and capability is interpreted to mean evidence
of an effective management approach, appropriate organizational
structure, sufficient experienced staff, adequate internal and external
controls and other resources (project partners, consultant support, and
other non-sponsor agency) to administer the complexities of the capital
project. FTA is seeking comment on what is the appropriate minimum
demonstration of capacity and capability and whether there are times
when FTA should seek more information to demonstrate capacity.
2. Satisfactory Continuing Control
A statutory requirement contained in 49 U.S.C. 5309(c)(1)(B) is
that FTA must assure itself that the project sponsor will have
satisfactory continuing control over the use of the equipment or
facilities. In short, this means that the project sponsor must own the
assets,
[[Page 46518]]
have a long-term lease, or otherwise be able to ensure that the federal
investment will endure for the useful life of the investment. FTA's
circulars contain guidance on satisfactory continuing control.
3. Maintenance of Facilities and Equipment
The section 5309(c)(1)(B) requirement concerning this provision
requires not only that the project sponsor have the capability to
maintain the equipment or facilities, but that the project sponsor
demonstrates the willingness to do so. Again, the FTA has typically
relied on a certification for this requirement, except in the case of
New Starts, where there is a statutory requirement that the sponsor
demonstrate adequate financial resources to maintain and operate the
existing system while expanding its capacity. We are considering
requiring project sponsors to develop and apply an asset management
plan for all fixed guideway capital projects. FTA proposes to use its
current state of good repair (SGR) initiative to further refine its
definition of asset management plan. However, FTA believes that an
asset management plan would assist grantees in project identification
and prioritization by showing the condition of existing facilities,
equipment, and rolling stock, and by producing schedules for major
maintenance or replacement along with estimated replacement,
rehabilitation, and repair costs.
4. Financial Plan
The statute currently requires an annual financial plan for all
projects exceeding $1 billion. FTA is considering whether to require
some type of financial plan for all fixed guideway capital projects.
Such a plan may include the identification of all Federal, State, and
local resources anticipated to be used for the project. FTA invites
comment on what should be the minimum expectations for financial plans
of fixed guideway capital projects.
5. Grant Project Description, Budget and Milestones.
FTA Circulars require that a grant application contain sufficient
project description, budget and milestones for both the sponsor and FTA
to know what is included in the project and the timeframe for
implementation. However, there is considerable disparity in the kind of
information submitted and this can often cause delay in grant
approvals. In order to assure consistency and transparency, FTA is
considering enhancing the current grant project description, budget and
milestone information it collects for fixed guideway capital projects.
The agency is further considering the best way to elicit adequate
detail to provide valuable oversight of project planning and
implementation. FTA has found that project implementation delays are
often caused by poor or incomplete planning, which means issues get
addressed during implementation usually with both a time and cost
impact. By including a more detailed description of the planning
aspects of the project, FTA could assure appropriate oversight of these
activities and that the project experiences fewer implementation
delays.
B. Major Capital Projects
The design and construction of a major capital project is a
challenging undertaking from a variety of perspectives, including the
large number of organizations involved in delivering the project, the
diverse interests of the organizations and individuals that have a
stake in the project, the potential imbalance between the quantity of
human resources with the right skill sets required to deliver a project
and the current organizational resources of the project sponsor, and
the timing and cost of procuring goods and services in a competitive
market. Additional challenges include integrated work flow processes
and controls that are internal and external to the owner's
organization, and management of the people, processes, physical and
financial resources needed to successfully complete the project. Based
on FTA's experience, projects that exceeded their budget or schedule
forecast typically encountered problems obtaining experienced staff in
a timely manner or failed to properly manage cost increases that were
within their control, including contract change orders.
Therefore, FTA proposes to strengthen its requirements for major
capital project sponsors by requiring them to demonstrate that they
have sufficient staff in place to demonstrate the capacity and
capabilities to successfully implement their proposed projects, as
opposed to simply relying on a plan to acquire the needed personnel.
Other changes would be aimed toward improving the effectiveness of the
FTA-required project management plan by requiring processes to be in
place, as described below, and proposing criteria to be used to measure
grantees' success in achieving desired outcomes or output and reporting
the results to FTA.
1. Technical Capacity and Capability
FTA's minimum expectations for a sponsor to demonstrate technical
capacity and capability include a set of policies and procedures
inclusive of resources and authority, defined, implemented, and
maintained by the sponsor's project management organization that
demonstrates its ability to: (1) Manage the project at each stage of
development, including the transitions between stages of development
and implementation; (2) conform to grant agreements, applicable
statutes, codes, ordinances, and safety and security standards; (3)
comply with FTA requirements on the part of agencies, consultants,
contractors, and subcontractors working under approved third party
contracts or inter-agency agreements; (4) maintain the project work
schedule agreed to by FTA and the sponsor and constantly monitor grant
activities to assure that schedules are met and other performance goals
are being achieved; (5) keep expenditures within the latest approved
project budget; (6) select and implement appropriate project delivery
methods; (7) implement an effective communications program to assure
that all project functions work effectively towards project delivery;
(8) demonstrate continuous in-house administrative and management
direction of project implementation; and (9) conduct adequate technical
inspection and supervision by qualified professionals of all work in
progress.
FTA would expect most, if not all, of the matters identified above
to be addressed in the project management plan, or alternatively in a
separate document that is clearly identified in the PMP and
incorporated by reference.
2. Project Management Plan (PMP)
The project sponsor must submit a formal and documented management
approach that embodies the agency's policies, practices and procedures.
Ideally, the PMP should outline in detail the sponsor's plan for
developing and implementing the project, including the monitoring that
will take place to ensure that each major phase or stage in the project
development process will be duly executed. The PMP should basically
define what the project is, the person responsible for implementation,
and when the work will be performed. The plans required should not be
interpreted as ``procedures.'' Procedures define how the work or
functions are to be implemented in conformance to a plan that sets out
the underlying philosophy and approach to each process. While the
procedures might
[[Page 46519]]
identify who does something and when, the plan would describe why and
what the action means.
FTA is considering placing additional emphasis on the PMP as a
primary tool in the sponsor's management of the project. The PMP should
demonstrate that the sponsor has thoroughly considered all phases of
the project, giving careful thought, in particular, both to the methods
used to execute the project and the interfaces between various
participants. The PMP should explicitly define the objectives of the
project and the methods and resources needed to meet those objectives.
It should lay out the overall management strategy, including project
controls, and the responsibilities, authorities, and measures of
performance for all parties involved. Additionally, the PMP should
reflect the unique characteristics of each project, such as the exact
scope of work and specific resources, budget, and schedule. The PMP may
be a compilation of associated plans or ``sub'' plans. Each sub plan
should be incorporated into the PMP by reference and a copy appended,
if practical, or as a minimum the signature page of the sub plan should
be provided. Additionally, FTA may require that the PMP and associated
sub plans packaged in a single or separate volume be supported by
individual procedures or references to existing procedures. For
example, a Test and Inspection Plan would be supported by detailed test
procedures and QA/QC procedures, but the procedures would be made
available to FTA on request instead of being submitted with the PMP.
FTA envisions that project sponsors will submit a core PMP document
for all major capital projects, tailored for the type of project for
which it is used, and including, at a minimum, the following sections
or stand-alone volumes or references to existing plans that serve the
same purpose: (1) General Project Overview (description, objectives,
performance measures, management approach, etc.); (2) Defined Scope,
Budget and Project Master Schedule; (3) Quality Assurance/Quality
Control (QA/QC) Plan; (4) Procurement Plan; (5) Safety and Security
Management Plan; (6) Risk and Contingency Management Plan; (7) Staffing
Plan (organizational chart, staff roles and responsibilities); and (8)
Project Controls and Systems. FTA expects the project sponsor's
responsible office supervisor/manager would approve the plan for his/
her respective office prior to submittal to FTA for approval. For
example, the head of QA/QC would approve the QA/QC Plan for the
proposed major capital project. This allows an integrated approach to
developing the PMP and is expected to result in a more effective and
efficient document. FTA would require each associated sub plan and the
overall PMP to be updated as needed and resubmitted for FTA's approval.
In addition to the above core PMP and associated plans, the
following sub plans are examples of what a project sponsor would
develop and integrate into the PMP: (1) Real Estate Management Plan;
(2) Fleet Management Plan; (3) Noise and Vibration Control Plan; (4)
Rail Activation Plan; and (5) Geotechnical Risk Management Plan.
In the forthcoming Notice of Proposed Rulemaking (NPRM), FTA will
provide further guidelines on when each plan within the PMP should be
submitted for approval.
Currently for New Starts projects the sponsor establishes a PMP
before entry into Preliminary Engineering and updates the PMP before
advancing into the Final Design, construction, and start-up phases of a
major capital project. FTA seeks comment on whether the requirement for
Small Starts projects that are designated as major capital projects
should establish a less detailed PMP than for New Starts projects. A
less detailed PMP would be required before entry into project
development and would be updated before advancing into construction.
FTA is also seeking comment on whether all or portions of the
project management plan should apply to some or all fixed guideway
capital projects or whether you would suggest a different approach to
project management, keeping in mind that FTA must ensure that project
sponsors manage their projects effectively and deliver projects on time
and within budget, while at the same time achieving projected benefits
and meeting quality standards.
3. Project Implementation
FTA may require project sponsors to demonstrate readiness to
advance their projects to the next phase or stage in the project
development process by successfully implementing the prerequisite
requirements. Currently, a typical New Starts project moves through six
major phases--Alternative Analysis, Preliminary Engineering, Final
Design, Full Funding Grant Agreement, Construction, and Revenue Service
Operations. A typical Small Starts project moves through five major
phases, with Preliminary Engineering and Final Design being collapsed
into a single phase called Project Development. FTA has developed
checklists for grantees to use as a quick reference guide and to
evaluate readiness to move into the next phase of project
implementation. To view existing checklists for Preliminary
Engineering, Final Design, and Full Funding Grant Agreements (FFGA) go
to: http://www.fta.dot.gov/planning/newstarts/planning_environment_
218.html. If the proposals outlined in this ANPRM are implemented, FTA
would create new checklists for all major capital projects as a guide
to project implementation. FTA seeks your comments on whether this
would be useful.
4. Performance Requirements
FTA would like project sponsors to use the PMP as a tool to create
a series of performance measures that they could report against. FTA
would use this information to report on the success of major capital
projects.
5. Reporting
FTA intends to propose specific reporting requirements for
recipients of federal funding for major capital projects, including but
not limited to, value engineering reports, safety and security
management reports, monthly progress reports, and cost updates for
FTA's cost databases. We seek comments both as to the appropriateness
of these reporting requirements as well as the potential content of
such reporting requirements. Please make your comments specific to each
of the suggested reports.
6. Exceptions for Past Performance
FTA is considering relaxing requirements for project sponsors who
have successfully completed other major capital projects within the
past 7 to 10 years if, for example, it can be demonstrated that the
organization has retained critical resources like the project manager,
the organization's business processes and procedures have not been
significantly altered, and the project involves the same or similar
technology. In the above context, determining the successful completion
of a major capital project would be based on FTA-established criteria
such as cost and schedule performance contained within a percentage of
the baseline cost estimate or revenue service date. We seek comment on
whether you agree with this approach. Are there other factors that
might justify relaxing FTA's requirements?
C. Questions
1. If a project budget is under $100 million, what is the
appropriate demonstration of capacity and capability? Are there
circumstances under which FTA should seek
[[Page 46520]]
additional demonstration of the project sponsor's technical capacity
and capability for a project categorized as a fixed guideway capital
project beyond what is described in this document?
2. What plans or requirements should FTA consider for a single
purpose grant like a fixed guideway major capital project? Should a
portion of the PMP apply?
3. Should the requirement for demonstrating satisfactory continuing
control be different for a fixed guideway capital project than the
regular FTA formula grant?
4. Are more detailed milestones and budget detail in a TEAM grant a
feasible mechanism for managing and providing oversight to a fixed
guideway capital grant? What other tools should be considered?
5. What minimum requirements should be contained in an asset
management plan?
6. Would checklists for all fixed guideway capital projects be
useful?
7. Should all or portions of the project management plan apply to
some or all fixed guideway capital projects? What portions would apply
to what specific types of fixed guideway capital projects? Please be as
specific as possible.
8. Would you suggest a different approach to project management,
keeping in mind that FTA must ensure that project sponsors manage their
projects effectively and deliver projects on time and within budget,
while at the same time achieving projected benefits and meeting quality
standards?
9. Please comment on FTA's integrated project management plan
approach discussed above. Do you think the integrated approach is more
practical? If not, how would you structure the PMP to facilitate its
usefulness?
10. Do you agree with FTA's plan to relax technical capacity and
capability requirements for more experienced project sponsors that meet
certain criteria? If you agree, are there other factors that FTA should
consider?
11. Should FTA require all sponsors of major capital projects to
develop and update PMPs for every project at corresponding stages in
project development?
12. Other than the statutory evaluation process that applies to New
Starts and Small Starts, should financial plans for all major capital
projects meet the same minimum standards?
13. For major capital projects other than Section 5309 New Starts,
should FTA specify a minimum number of years that a grantee's financial
plan should cover? For example, is a financial plan covering three to
five years of sufficient length to determine a grantee's financial
capacity? Or should FTA require that the financial plan extend through
the time period required for completion of the major capital project?
IV. FTA Oversight of Fixed Guideway and Major Capital Projects
A. Fixed Guideway Capital Projects
Not all fixed guideway projects are major capital projects.
Consequently, the oversight of many Fixed Guideway Capital Projects is
performed primarily by FTA staff in its regional offices. PMOCs are
currently utilized to assist FTA in providing oversight of Major
Capital Projects only.
B. Major Capital Projects
In the early 1980's several FTA-funded transit projects suffered
major setbacks due to problems with quality, cost overruns, and delays
in schedules. Thus, FTA received its project management oversight
program mandate and funding from Congress in the Surface Transportation
and Uniform Relocation Act of 1987. Congress directed FTA (then UMTA)
to establish the Project Management Oversight (PMO) Program. This
program has grown correspondingly with the growth of the overall FTA
program.
1. Roles and Responsibilities
Since the inception of its Project Management Oversight program in
1989, FTA has supplemented its own staff with Project Management
Oversight Contractors (PMOCs) to provide oversight for major capital
projects. The primary role and responsibility of the PMOC is to help
FTA ensure that such projects are on time, within budget, and in
conformance with Federal requirements; are constructed to grantees'
approved plans and design specifications; and are efficiently and
effectively implemented. An initial, important role of the PMOC is to
review the project sponsor's project management plan on behalf of FTA,
and to make recommendations concerning its adequacy.
During the design, construction, start-up and operational phases of
a project, on behalf of FTA, the PMOC monitors and reports on the
project's development and implementation, consistent with its approved
project management plan and accepted engineering and project management
practices.
The PMOC performs routine project management oversight monitoring
through on-site reviews and off-site document reviews. FTA uses these
reviews to oversee the project and to conduct quarterly review meetings
with the project sponsor. Periodic reports are submitted to FTA
documenting project status, activities, and open issues including, but
not limited to, the following:
Timely management decisions.
Delegations of authority.
Management of project scope.
Internal controls.
Schedule analysis.
Cost estimates and trends, including forecasting.
Delivery of a quality product.
Project security/safety.
Continuing technical capacity.
Risk assessment and contingency management.
FTA's primary objectives for providing Project Management Oversight
of major capital projects are to assess grantees' technical capacity
and capability and project management experience to successfully
implement major capital projects and to monitor projects to ensure that
they are progressing on time, within budget, and in accordance with the
grantees' approved plans.
While FTA's program has grown significantly since 1989, its staff
size has stayed the same. The PMOCs help to fill this resource gap as
well as to provide specialized expertise when needed. While the
oversight program has grown based on its percentage takedown of an
expanding program, the need for oversight has increased even faster
than the available funding because the larger program has generated
both higher demand and more complex projects. FTA seeks comment on how
it should best use its PMOCs to supplement its limited staff resources.
2. Risk-Informed Project Management Oversight Approach
Over the last five years, FTA has refined its approach to oversight
to integrate risk analyses and transit specific databases to help the
grantee deliver a successful project. By means of a Full Funding Grant
Agreement (FFGA) for New Starts, or Project Construction Grant
Agreement (PCGA) for Small Starts, both FTA and a grantee mutually
agree on the scope, cost and schedule of a particular project.
Management of the project to ensure that all three are delivered
successfully begins early in the project development phase.
FTA has increased its use of risk assessment, management and
mitigation strategies to ensure that Major Capital projects are
constructed on-time and within budget. FTA relies on a portfolio of
risk management tools to prevent project costs from escalating, to
assess
[[Page 46521]]
the magnitude of risks in a project, and to help the project sponsor
predict and establish a project budget and schedule. The most important
objective of risk assessment and management protocols is to help the
project sponsor predict the budget and schedule and to ensure that the
sponsor can complete the project within the budget and schedule
identified in the FTA grant award.
Project risks track the project development process. In general
terms, they can be described as follows:
Requirements Risk. The first step in project development
is to identify the requirements--risks associated with definition of
basic project needs and transit system requirements to meet those
needs;
Design Risk. The second step is project design--risks
involving the adequacy of the information available at each stage of
design and engineering, geotechnical conditions in particular, and the
impact of redesign;
Market Risks. The third step is to identify market risks--
risks associated with both the procurement approach and the market
conditions that can affect the cost of materials and the availability
of bidders for construction services, materials, real estate, and
manufactured products like vehicles; and
Construction Risks. The final step is to identify
construction risks--those risks associated with the actual construction
and start-up of the system.
Once risks are identified, FTA and project sponsors must determine
the best method for managing those risks. The preferred methods for
managing risk are avoidance, reduction, and mitigation. Because they
are really only ways of providing more up-front funding or reducing
overall costs but do not reduce risk, less preferred risk management
techniques include increasing contingency, reducing project scope, or
reducing the level of service. FTA works with each project sponsor to
determine the most feasible strategy for each project.
Project sponsors document this risk-informed management process in
the project management plan. Including these strategies can help ensure
that the project sponsor has the requisite technical capacity and
capability to deliver the project on time and within budget by ensuring
that the project sponsor understands methods for addressing risks and
that it implements strategies to avoid future delays.
FTA can tailor these risk assessment and management tools to take
into account the unique circumstances of a project, such as sponsor
organization and technical capacity and capability, and the project
complexity or status.
C. Questions
1. Should FTA assign PMOCs to oversee projects other than Major
Capital Projects? Please provide the rationale for your recommendations
including how oversight of these projects should alternatively be
provided if PMOCs are not utilized.
2. At what stage in the development process should FTA assign PMOCs
to New Starts projects? Explain the basis for your recommendation.
3. Other than a detailed review of a grantee's financial plan, what
other methods might FTA utilize to ensure a grantee has the financial
capacity to construct and operate a major capital project?
4. Please comment on FTA's Risk Management approach. If you do not
agree with FTA's approach, please recommend an alternative and provide
a basis for your recommendation.
Following the close of the comment period on this ANRPM, FTA will
summarize and respond to the comments and issue a Notice of Proposed
Rulemaking that posits explicit text for a rewrite of the regulation at
49 CFR Part 633. We expect to publish such a Notice of Proposed
Rulemaking in 2009.
Issued this 4th day of September, 2009.
Peter M. Rogoff,
Administrator, Federal Transit Administration.
[FR Doc. E9-21849 Filed 9-9-09; 8:45 am]