Tag: Funding Strategy

Hidden Revenue Potential at Airports

luggage at airport

Whether traveling for business or leisure, many of us have experienced firsthand the increase in the number of air travelers. Although fully booked flights are encouraging news for the industry, they also mean higher operating costs for the individual airports. To help defer these costs and become self-sustaining, many airport managers have begun to explore creative revenue generation opportunities.

A study conducted in 2017 by Airports Council International (ACI) estimated that the airports total cost per passenger is approximately $13.69. This value however exceeds the global average of $9.95 for aeronautical revenue received per passenger. While aeronautical revenue per passenger seems to be constant, the airport has the potential to increase revenue by finding creative ways to increase the non-aeronautical revenue associated with each passenger.

Revenue generated by an airport is typically divided into two streams. Aeronautical revenues include those funds generated to the operation and use of the airfield by aircraft or aviation-related businesses. Non-aeronautical revenues relate to those operations and uses that are incidental to the operation of aircraft. Traditional sources of non-aeronautical revenue include parking, rental cars, terminal lease, concessions, restaurants, and advertising. According to ACI, 39.9% of total global airport revenue is contributed from non-aeronautical revenue sources. Successful airport managers understand not only the aviation-related operations of their airport, but also the revenue potential associated with non-aviation operations and business. Some non-aeronautical revenue strategies that are applicable to both commercial service and general aviation airports include:

non aeronautical strategies

As technology advances, additional non-aeronautical revenue sources may also rise and airport administrators must be willing to embrace these opportunities to help defer ever-increasing operating costs and become self-sustaining.

For further questions about these creative approaches please contact me.

Competitive Grant Writing 101: 6 Tips to “Show You the Money!”

Photo of papers on desk with person writing on them

Competitive grants can be a big help for project owners who are responsible for large, complicated and expensive infrastructure improvement projects.  Whether potential grants originate from federal agencies, such as the USDOT or the EPA, state agencies, or local entities, the competition can be fierce and funding requests typically significantly outweigh what is available. So, you have a great project in mind – what do you have to do to position your project over the tens, hundreds or thousands of others that are pursuing the same pot of gold? Here are some opinions and helpful hints that may guide you to success!

Be Prepared and Get Started Early.

Competitive grant applications require extensive and detailed information and the submissions may have short turnaround times.  If you wait to do your conceptual planning or develop a convincing “purpose and need” for the project until the Notice of Funding Opportunity (NOFO) is issued, you may be too late. For example, the recent $900 million BUILD Grant from USDOT was released on April 23, 2019, and applications were due no later than July 15th – a 12-week turnaround. This may seem like a lot of time, but it disappears quickly considering what needs to be included in a solid application, even if you retain a consultant to assist and do the heavy lifting.  In anticipation of a NOFO being issued, having a completed feasibility study, conceptual plan, project cost estimates, public support and other elements of a strong application can go a long way – there just isn’t time to prepare and collect the information once the NOFO is issued as the application preparation itself can be intense.

Be Objective about Your Project.

Does your project truly check off the boxes that the funding agency is looking for with regard to safety, socio-economic benefits, state of good repair, improvements to quality of life, life cycle analysis, benefit vs. cost analysis, and other important elements? Competitive grant applications such as TIGER, BUILD and others can be time-consuming and expensive to prepare. Make sure you are looking at your project objectively against the required criteria and not simply justifying its worthiness by your personal attachment to its local importance. Answer this – why would the funding agency want to participate?  The funding will only buy so many ribbon-cuttings — so why yours?

Tell the Story of the Project.

Picture this – you are a reviewer of applications in Washington, D.C. and you have a stack of 500 applications to wean down to those deserving further review to eventually make a recommendation of a certain number to the ultimate decision-maker, maybe the U.S. Secretary of Transportation.  The recent BUILD grant application had a 30-page limit for the project narrative – for 500 applications that could total over 15,000 pages of project content to review!  Make it interesting – don’t make it read like an engineering report cluttered with facts and data (not that those aren’t important).  The reviewers aren’t all engineers – some have business backgrounds, while others may have a pure administrative or political background.  Use graphics and maps wherever possible. Sell your project in a way that it meets the funding requirements and tells an engaging story of the positive impacts of local, regional and possibly national importance.

Be Invested and Don’t Just “Take a Shot” and Hope for the Best.

If it looks like the application is presenting a project that will die a quick death without grant funding maybe it isn’t really all that vital and you are only presenting the project for the money. Funding agencies (and politicians) hope your project is important enough that somehow it will move forward even without the grant funding – grant funding would simply accelerate the benefits to the taxpayers.  Your application must demonstrate that there is significant funding in place, or debt service, to be able to fund the project and the grant funding will help that much more to defray local costs.

Don’t Ask for the Moon.

Request the real amount that you need for the project after significant investment from other sources. If 95% of the project costs are proposed to be through the competitive grant funding that may not inspire a lot of confidence in the preparedness of the project owner to be able to move the project forward. For instance, with a set amount of funding to spread around, two $10M ribbon cuttings creates more photo opportunities than one $20M ribbon cutting.  There should be a strategy in the amount requested compared to your other competing interests and funding commitments. Answer this too – if you got the grant funding to offset costs, what would you do with the money that was offset?  What other problem could you / would you solve for the taxpayers?

Last but not Least – Check and Double-Check the Format for the Submission.

Most competitive grant applications have very strict composition requirements including the table of contents, page limits, and font types and sizes, just to name a few. Make sure you are thoroughly familiar with each of these requirements and you are adhering to them during the preparation of the application – not as a final task right before the submission is due.

Submit Early if Possible.

Don’t let technological glitches, like an internet failure, get in the way of your million-dollar request being accepted. Many grant application processes allow the applicant to submit their application electronically and update it or resubmit components up to the deadline published in the NOFO. There may also be registrations, passwords, user accounts or other things like that which should be set up early – make sure those tasks are done well in advance. Nobody wants to be sitting at the keyboard being denied access to the submission website or during a power outage within the hour the submission is due.  Plan days ahead and rest easy.

Grants can make a big difference in the success of your project – but competition can be fierce. NOFO’s are issued throughout the year so know in advance what funding may be available and when.  Being ready and preparing a quality grant application can make all the difference.

Asset Management – Optimization of O&M & CIP, & Funding Strategy

Recently, John Jackman, P.E. and Carl Quiram, P.E. finished our series discussion on Asset Management highlighting the Optimizing O&M and CIP, as well as Funding Strategy tasks. The concepts presented in this video reflect the utilization of collected data collected to more accurately develop a Capital Improvement Plan and the necessary steps to fund those projects. Presented are examples used by various municipalities as wells as the information necessary to capitalize on the Asset Management Program data.  – Click Here to review the other presentations given as part of the Asset Management Series.

Continuum of Asset Management

Continuum

This graphic illustrates the Asset Management continuum with a focus on system-wide assets. Understanding the basic steps of a successful Asset Management program will help in developing a process and not a project. By describing the steps of a program it will assist decision makers in understanding the cohesive benefit for everyone to be successful and supported.

Inventory: An inventory, cataloging and mapping of the existing assets and their associated data, creates the program foundation. This includes both vertical and horizontal assets, the various information collection methods, and the accuracy standards that have to be met. Different sources of information, including paper records, spreadsheets and databases can be used to develop the list of assets. Importance is stressed on the uniformity of format for each of the assets cataloged with an eye towards its long term value to the higher end evaluation needs of the asset management program. In varying circumstances environmental, energy, financial and political information is collected with the asset logged.

Condition Assessment: An industry standard form of measure is established using asset management software to manage the following variables: age, location, risk, and current condition. The development of these standards is subjective to the organizations minimum quality level and ensures consistency throughout the program. Without these established standards asset condition becomes opinion-based and non-comparable.

Maintenance: Establishing a maintenance plan and tracking all planned and reactive efforts enables the program to validate the repairs approved, and the associated costs. Utilizing the manufacturers’ operation and maintenance manuals (where appropriate) to develop your program will ensure all asset characteristics are accounted and planned for. Work flows will be developed to define how users will capture pertinent information and keep it up to date. Standard operating procedures will be developed for preventive maintenance and energy responses to reduce the risk of failure as well as frustration. When work orders are issued, the associated tasks will be completed in the program for future planning efforts.

Lifecycle Costs: Improving asset utilization can extend asset life and performance while reducing capital costs and asset-related operating costs. Cradle to grave asset costs should be established which would include the acquisition cost, maintenance and operation costs as well as end of life costs. For many assets this would be difficult to establish, however, the more realistic the input the more reliable the output. Once this system is established, new assets would be input accurately improving the data’s usefulness over time.

Level of Service: Understanding the current level of service being delivered by the asset to its consumers, and identifying the gap between the current and proposed standards will identify the desired goals moving forward.

By formally defining a Level of Service, the goals of the program will be communicated, a link between cost and service identified, customer expectation met, and measurable results developed. Standardizing the assessment process will allow for all users to identify the remaining life of an asset and the factors impacting that useful life.

Criticality/Consequence of Failure: Identifying the impacts failure would have on the associated assets, consumers, and system is known as criticality. By developing an understanding of the consequence of failure, the organization is able to manage the associated risk. Risk is simply calculated on the probability and consequence of failure as defined by the equation:

Probability of Failure x Consequence of Failure = Risk

With an understanding of how we can reduce the system’s risk and focusing on assets where risk cannot be reduced, we are able to identify the priority of asset repairs or replacements. Failure has many factors including impacts to social, financial and environmental environments and therefore each need to be evaluated for each asset. By monitoring high risk assets impacts to those factors can be reduced, or eliminated in certain circumstances.

Optimizing Operations & Maintenance and Capital Improvement Plan: Understanding the assets condition, life cycle costs, criticality and the desired level of service allows for the analysis of an asset’s true useful life thus reducing premature replacement. By embracing asset management technology data will be gathered and analyzed in standardized and regular ways to ease the management process. By completing an analysis in a sound asset management system, a rational and defendable Capital Improvement Plan can be generated for various funding strategies and the results on Levels of Service can be clearly communicated.

Funding Strategy: Developing a long-term funding strategy based on the highest failure risk assets will assist in preventing sizeable cost increases to the system owner as well as its users. Using long-term budgeting for system assets will determine the priority based on the environmental impacts. This information will affect any grants or loans and therefore need to be discussed. By developing a long-term plan for the future the organization can assess the different impacts changes to their assets plays on their future Capital Improvement Plan.

We will be hosting a series of Lunch and Learns in our Manchester office explaining each of these tasks in more depth. To find out the dates or to join us for this series contact Nichole Davis.