FTA’s New Starts projects  under SAFETEA-LU were defined as new fixed guideway or extensions to  existing fixed guideway capital projects with a total capital cost of $250  million or more or a Capital Investment Grant program contribution of $75  million or more. The Length of the Development Process for Projects Varies Substantially Depending upon Project-Specific and Local Factors

		Length of the Development Process Varies Substantially across Projects

Among the 32 transit projects we reviewed, we found significant variation  in the length of time sponsors of New Starts, Small Starts, and Very Small  Starts projects needed to complete the development process (see fig. 2). Specifically, according to our analysis of FTA and project  sponsor data, we found that New Starts projects took about 3 to 14 years  to complete the development process, Small Starts projects took about 3  to 12 years, while Very Small Starts projects took about 2 to 11 years. 3). Sponsors of 17 of 32 of the  projects we reviewed stated that activities to secure local funding  contributed to the length of the development process. For example, project sponsors  for 2 of the 32 projects we reviewed cited FTA’s risk assessment as a  requirement that affected the length of the development process.addition, sponsors of 4 of the 16 Very Small Starts projects we reviewed  speculated that some of the longer review times for smaller projects may  have been a result of FTA’s initial uncertainty in how it would implement  the simplified review process for Very Small Starts projects. While FTA has acknowledged that the process can be  lengthy and frustrating, FTA has taken some steps over the last several  years to further streamline the development process. The Majority of Capital Cost Estimates Did Not Change Significantly during the Development Process, and Changes That Did Occur Were due to Various Factors

We found that capital cost estimates for New Starts, Small Starts, and  Very Small Starts projects during the development process generally did  not change substantially prior to the award of federal funding. Project  sponsors told us that cost estimate changes occurred as a result of  changing market conditions, FTA’s application of additional project  contingencies and scope modifications, among others. For 23 of the 32 projects we reviewed, the original cost  estimated upon entry into the Capital Investment Grant pipeline was  within 10 percent of the final cost estimated prior to receiving federal  funding. The original capital cost estimates for the remaining 9 projects  varied by as much as 41 percent lower and 55 percent higher from the  estimates used at the end of the development process. For example, officials at Valley Transportation  Authority (VTA) (located in Santa Clara, California) stated that, as part  of FTA’s risk assessment review, the project-management oversight  contractor recommended an increase in the contingency amount for  the project by $100 million. Project Sponsors Use Regional Travel Models to Forecast Ridership, and FTA Provides Funding and Technical support

		Project Sponsors Generally Forecast Ridership Using Regional Travel Models

Project sponsors rely on support from MPOs to develop their ridership  forecasts. By and large, New and Small Starts project sponsors whom we  interviewed generally use the regional travel models of the project  sponsor’s local MPO to forecast ridership. This method essentially uses actual  transit ridership data, which includes, among other data, observed  origins and destinations of transit users and surveys of region-wide  transit riders. For example, for the Portland, Oregon,  Streetcar Loop project, the Tri-County Metropolitan Transportation  District of Oregon (TRIMET) used travel forecasts prepared by the  Portland Metropolitan Planning Organization. As previously mentioned,  according to FTA, one of the key requirements for a Very Small Starts  project is that at least 3,000 existing transit riders will use the proposed  project on an average weekday. To adequately document the required number of  existing transit riders, the sponsoring agency must conduct a detailed  counting of riders of existing public transportation in the project corridor,  and estimate the number of existing riders that will use the Very Small  Starts project. 1. These include the following:  Funding. According to FTA officials, the agency contributes funding to  state agencies and MPOs to support, among many other activities, the  collection of travel data and the development of travel-forecasting  procedures. We interviewed 13 New Starts and Small Starts project sponsors, and a  majority (7) said that FTA’s technical assistance, which includes  reviewing ridership forecasts, was generally helpful. Agency Comments

We provided DOT with a draft of this report for review and comment. DOT  provided technical comments, which we incorporated as appropriate. Appendix I: Objectives, Scope, and Methodology

The Moving Ahead for Progress in the 21st Century Act (MAP-21)  mandated GAO to biennially review FTA’s processes and procedures for  evaluating, rating, and recommending new fixed-guideway capital  projects and core capacity improvement projects and the Department of  Transportation’s (DOT) implementation of such processes and  procedures. In this report, we identify (1) the extent to which the length of  the development process varies across New Starts, Small Starts and  Very Small Starts projects and what factors affect the length of this  process, (2) the extent to which capital cost estimates for New Starts,  Small Starts, and Very Small Starts projects change throughout the  development process, and what factors contribute to the changes, and (3)  how project sponsors forecast ridership, including any support that FTA  provides in helping them develop these forecasts.
Why GAO Did This Study

FTA provides funds to transit project sponsors to build new or extensions to existing fixed-guideway transit systems through the Capital Investment Grant program. This program funds New, Small, and Very Small Starts projects—funds that are based partly on the project's total estimated cost. For example, for New Starts, project capital costs exceed $250 million or the program contribution exceeds $75 million; for Small Starts, capital costs are less than $250 million and the program contribution is less than $75 million. The pre-construction development process for these projects includes various steps between the time when a project sponsor identifies the project to be funded and the formal award of FTA construction funds. During this process, the scope, capital cost, and ridership estimates can change.
The Moving Ahead for Progress in the 21st Century Act mandated that GAO biennially review these types of projects. This report describes (1) the length of the development process across these projects and the factors affecting the length, (2) capital cost-estimate changes throughout this process, and the factors contributing to the changes, and (3) how project sponsors forecast ridership, including support that FTA provides. GAO analyzed pertinent laws, regulations, agency guidance, and FTA data for the 32 New, Small, and Very Small Starts projects initiated and funded from 2005 to 2013, prior to recent changes in program processes. GAO interviewed FTA staff and project sponsors. DOT reviewed a draft of this report and provided technical comments, which were incorporated as appropriate.

What GAO Found

For the 32 New Starts, Small Starts, and Very Small Starts projects funded from 2005 to 2013 that GAO reviewed, the length of the development process varied substantially, from as little as 2 to as long as 14 years, based on GAO's analysis of data from the Federal Transit Administration (FTA) and project-sponsors. GAO found that the development process took 3 to 14 years to complete for New Starts projects, 3 to 12 years for Small Starts projects, and 2 to 11 years for Very Small Starts projects. The length of the process is generally driven by factors that are often unique to each project, including (1) the extent of local-planning activities prior to formal approval for funding, (2) the extent and availability of local and financial support, and (3) the extent of FTA oversight activities. For example, sponsors of 17 of the 32 projects GAO reviewed stated that activities to secure local funding contributed to the length of the development process. FTA has taken some steps to streamline this process. For example, in January 2012, FTA eliminated the requirement for the development of a hypothetical alternative that served as a basis of comparison to evaluate a proposed project.
GAO found that capital cost estimates for New Starts, Small Starts, and Very Small Starts projects during the development process generally did not change substantially prior to the award of federal funding. For 23 of the 32 projects GAO reviewed, the final cost estimated prior to receiving federal funding was within 10 percent of the original cost estimates. The remaining 9 projects varied by as much as 41 percent lower and 55 percent higher than the estimates used at the end of the development process. Several project sponsors told us that, when changes did occur, it was a result of changing market conditions and FTA's recommending that sponsors increase project costs to cover unforeseen events, among other factors. For example, officials at the Valley Transportation Authority, located in Santa Clara, California, stated that FTA recommended that it increase the project's cost by $100 million to cover unforeseen events.
New and Small Starts project sponsors whom GAO interviewed generally forecast ridership using regional travel models prepared by metropolitan-planning organizations (MPO). Specifically, 8 out of the 9 New Starts project sponsors and 3 out of 4 Small Starts project sponsors GAO spoke with use these travel models. For example, for a Portland, Oregon, streetcar project, the project sponsor used travel forecasts prepared by the Portland MPO. The other New Starts and Small Starts project sponsors use actual transit-ridership data from surveys of regional transit riders; and a statewide travel model, respectively. On the other hand, FTA procedures permit sponsors of Very Small Starts projects to essentially demonstrate, through a detailed counting of riders of existing public transportation in the project's corridor, that the proposed project will service at least 3,000 transit riders on an average weekday. FTA has taken a number of actions to support the development of ridership forecasts. These include, among other actions, providing funding to state agencies and MPOs to help them collect travel data and develop forecasting procedures and providing technical support, such as reviews of final forecasts. GAO interviewed 13 New Starts and Small Starts project sponsors and most said that FTA's technical assistance, which includes reviewing the ridership forecasts, was generally helpful.