1 iftwg overview project selection and cost benefit analysis michael p. onder, team leader office of...

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IFTWG OverviewProject Selection and Cost Benefit Analysis

Michael P. Onder, Team LeaderOffice of Freight Management and OperationsUSDOT-FHWA

CVFM PresentationAugust 31, 2005

IFTWGIFTWGIntermodal Freight Technology Working Group

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IFTWG Historical Summary:



1998

Formed by joint recommendationIndustry, government, military, vendors

1999 2004 2005

Chartered to address consensus needsBased on operational/ process analysis

Met regularly• 2-3 times/year w/ITS America• Communicated program/ project

information• Formulated, planned, reviewed project

results

Identified/sponsored pilot demonstrations

• Injected technology into business practices

• Formulated to facilitate technical/operational evaluation

• “Business case” analysis incorporated for sustainability analysis

2003

Meetings• Two Annual meetings to coincide with

IANA meeting • Intercessional Web Cast • Outreach to CHCP

Project Planning Process• Revamped to expand industry

participation • Introduced Working Group Project

Vetting Process• Selection Process implemented • Introduced Analysis Tools focused

on Business Process and Cost Benefit Analysis

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Working Group Philosophy:The IFTWG is a Forum:

• For key members of the stakeholder community to collaborate across organizational and institutional boundaries

• For identifying, vetting, analyzing, and evaluating technological / procedural solutions to challenges within the intermodal freight transportation community

• For promoting the application and adoption of technology to improve freight movement



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Stakeholders:• Industry

– Members: Union Pacific Railroad, American Presidents Line, Hanjin Shipping, Norfolk Southern Railroad, Landstar, Limited Brands

– Roles: Real-world test bed, project champions, assets

• Government– Members: FHWA, TSA, RITA, CBP, Joint Program Office

ITS– Roles: Facilitation, reduction/removal of barriers to

collaboration

• Vendors– Members: Trac Lease, TTX, The Greenbrier Companies,

QUALCOMM INC., Embarcadero Systems Corporation, Optimization Alternatives

– Roles: Practical, responsive evaluation-ready solutions



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Methods and Tools:

• Open discussions– Sharing of concerns and priorities– Exchange of ideas

• Transparent operations– Documented meetings– Open access to leaders– Project Selection Process

• Rigorous analysis– Project selection and feasibility

methodologies– Evaluation of results



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Performance Metrics (Rate the technology against the performance metrics list generated by the CBM Tool)

Benefit/Cost (1) Input technology costs, life, benefits, & “As Is” cost drivers

(2) Input benefits of the technology, and “To Be” cost

drivers

Performance Measures(Industry Standard Performance

Metrics aligned with business processes)

Cost Drivers(Generate a list of cost

drivers based on defined business process map)

Final Output(1) Qualitative Performance Score: Reliability , Responsiveness, Flexibility, Assets, Safety, &

Security(2) Quantitative Financial output: Net Present

Value, Internal Rate of Return, Payback Period, and Benefit Cost Ratio

Technology Selection(Select a technology to

rate/evaluate)

Business Process Mapping(Define your Business

Processes)Qualitative Analysis

Technology Evaluator (User)

Expert Panel

Quantitative Analysis

Project Selection

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IFTWG Analysis Tools

Business Process Mapping




drivers









rate/evaluate)




Expert Panel


• “AS IS” Business Processes captured in the supply chain relative to the identified project

• Business Process Maps include:– Supply Chain Phase (Shipment, Transport, Delivery)

– Organization/Party Performing the Work

– Information Flows of data

– Physical Flows of freight moving

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Shipment Preparation (SP)

Data Element/StandardProcess VariationPhysical Process

3. Shipment Request

SP to FF

3. Shipment Request

SP to FF

6. Pre-alert

FF to IA

6. Pre-alert

FF to IA

8. Shipping Marks and

Packing List

SP to various

8. Shipping Marks and

Packing List

SP to various

7. IA assigns Unique Tracking #, begins inbound shipment

scheduling

7. IA assigns Unique Tracking #, begins inbound shipment

scheduling

11. SP prepares consignment endorsement, sends to MC

11. SP prepares consignment endorsement, sends to MC

4. CA delays export clearance

to FF

4. CA delays export clearance

to FF

15. FF books air carriage with AC

15. FF books air carriage with AC

Nex t S

hee t

Lin

k #1 : Tru

c k –to

-Air (S

egm

en

t 2)

0.00 08:45

1.25 10:00

5.75 14:30

7.75 16:30

-1.25 hrs. 1.25 hrs. 4.5 hrs. 2.0 hrs. 1.50 hrs. 12.75 hrs.1.0 hrs. 2.00 hrs.1.75 hrs.

8.75 17:30

10.25 19:00

23.00 07:45

24.75 09:30

26.75 11:30

27.50 12:15

Information FlowTime

TechnologyLink 1: Truck-to-Air (Segment 1) B Buyer SP Supplier FF Freight Forwarder SL Seller

AC Air Carrier CA Customs Authority MC Motor Carrier

Internet E-mail

Internet E-mail FacsimileFacsimile

**U.S. Only****U.S. Only**

Key: FF unique identifier

Key: FF unique identifier

InternetInternet FacsimileFacsimile

Unique Tracking # =

U.S. “Customs Entry Number.

Unique Tracking # =

U.S. “Customs Entry Number.

E-mail/Structured

Electronic

E-mail/Structured

Electronic

Paper, Structured

Electonic, E-mail

Paper, Structured

Electonic, E-mail

AC, MC destination booking may be completed after

consignment departs facility

AC, MC destination booking may be completed after

consignment departs facility

FF not using pre-

existing capacity

purchased with AC

FF not using pre-

existing capacity

purchased with AC

Supply Chain:Eyewear

NE U.S.A-Italy (Eastward)

Process Handoffs: 4 Total Information Exchanges: 18Process Duration: 56.50 hrs.Link Duration: 36.25 hrs.Segment Duration: 27.50 hrs.Customs Requirements: U.S., ItalyExit Port: John F. Kennedy, NY (JFK)Entry Port: Milan Linate, Italy (LIN)

Supply Chain Process Analysis and Technology Research Map

Trigger

Handoff

Overnight Staging

Telephone, Structured

Electonic, E-mail

Telephone, Structured

Electonic, E-mail

Paper, Structured

Electonic, E-mail

Paper, Structured

Electonic, E-mail

Paper, Structured Electonic,

E-mail


E-mail


E-mail


E-mail

13. MC prepares

consignment bill of lading

13. MC prepares

consignment bill of lading

2. FF receives shipment request

2. FF receives shipment request

6. FF starts

shipment schedule

6. FF starts

shipment schedule

8. SP prepares shipping marks and packing list

8. SP prepares shipping marks and packing list

12. SP creates manifest

12. SP creates manifest

H

1. SP receives SL’s order

alert, prepares shipment

request to FF

1. SP receives SL’s order

alert, prepares shipment

request to FF

5. CA issues export clearance

to FF

5. CA issues export clearance

to FF

T

3. FF starts export clearance,

enters CA system

3. FF starts export clearance,

enters CA system

T

10. MC schedules outbound,

inbound pickup

10. MC schedules outbound,

inbound pickup

T

9. FF schedules pickups with MC, CS, AC

9. FF schedules pickups with MC, CS, AC

14. SP seals and locks container

14. SP seals and locks container

7. Unique Tracking #

IA to various

7. Unique Tracking #

IA to various1. Order Placed

B to SL

1. Order Placed

B to SL

2. Alert of Order

SL to SP

2. Alert of Order

SL to SP

9. Outbound Pickup Booking, Air

Facility Inbound Pickup Booking,

Consolidation Inbound Booking

FF to MC, AC, CS

9. Outbound Pickup Booking, Air

Facility Inbound Pickup Booking,

Consolidation Inbound Booking

FF to MC, AC, CS

4. AES Shipment Entry

FF to CA

4. AES Shipment Entry

FF to CA

5. Export Clearance

CA to FF

5. Export Clearance

CA to FF11.

Consignment Endorsement

SP to MC

11. Consignment Endorsement

SP to MC

10. Manifest

SP to various

10. Manifest

SP to various12. Bill of

Lading

MC to various

12. Bill of Lading

MC to various

13. Air Carriage Booking

FF to AC

13. Air Carriage Booking

FF to AC

T

0.75 hrs.

Hrs. Elapsed EST

H

OS

T

OS

OS

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Cost Benefit Methodology

“AS IS” Metrics

• Qualitative – Industry Standard Performance Metrics Linked to each Business Process

• Quantitative – Cost Drivers Assigned to each Business Process– Examples:

• Time to perform the task (Transport Time, Order to Delivery)

• Number of Occurrences (Shipments, Orders)




drivers









rate/evaluate)




Expert Panel


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Cost Benefit Methodology “AS IS” MetricsQualitative Performance Measure

Qualitative Performance

Measure Selected

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Cost Benefit Methodology “AS IS” Metrics

Processes Selected

Processes Selected and Associated with

Qualitative Performance Measure

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Cost Benefit Methodology “AS IS” MetricsQuantitative Cost Drivers

Quantitative Cost Driver associated with

Business Process

“AS IS” Value of Cost Driver

Captured

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Cost Benefit Methodology

“TO BE” Design

• Expert Panel Evaluation of “TO BE” Project with Technology Deployed– Inputs Performance Metric Improvements– Inputs Cost Driver Improvements

• User Inputs into CBM Tool– Total Cost of the Project– Cost of Capital– Planned Life of the Project




drivers









rate/evaluate)




Expert Panel


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Cost Benefit Methodology “TO BE” Design

Qualitative Performance Measure

Potential Technology Rated by Qualitative Performance Measure

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Cost Benefit Methodology “TO BE” Design Quantitative Cost Drivers

Cost Driver Improvements for each Technology

Selected

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Cost Benefit MethodologyFinal Output

• Qualitative Performance Score– Categories: Reliability, Responsiveness, Flexibility, Assets,

Safety, Security– Score given as a total and an average

• Quantitative Results– Net Present Value– Internal Rate of Return– Payback Period– Benefit Cost Ratio




drivers









rate/evaluate)




Expert Panel


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Cost Benefit Methodology Final Output

Quantitative Results

Qualitative Results

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drivers









rate/evaluate)




Expert Panel


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Summary:

• IFTWG members proposed 8 projects from the annual meeting in San Antonio in 2004– Six from industry, One from Government, One from the

consultant community• Selection Process rendered Two Top Projects in 2005–

from industry stakeholders.• Chicago Cross Town Improvement Project

– Potential Partners include: Class One Railroads, Drayage Companies, TSA, FHWA, FRA

• Terminal Optimization Project– Potential Partners include: Drayage Companies, Ports, Railroads,

CHCP, MARAD

• Projects to be presented to USDOT as either exploratory or stand alone Tier II Projects when CBM Analysis is complete

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The End

Please write or call:

Michael P. Onder,

E-mail: [email protected]

Telephone: 202-366-2639

mailto:[email protected]

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