ttc new subway train price analysis booz

CONTRACT C31PJ06855 – FINAL REPORT

PRICE ANALYSIS OF NEW SUBWAY TRAINS

Toronto Transit Commission

August 23, 2006

This report is confidential and intended solely for the use and information of the company to whom it is addressed

T A B L E O F C O N T E N T S

EXECUTIVE SUMMARY I. INTRODUCTION 10 II. DATA PRESENTATION 20 II.1 COMPARATIVE PRICE MODEL 26 II.2 COMPONENT PRICE MODEL 38 II.3 FTA TERM DATA MODEL 43 III. ANALYSIS 49 IV. BOMBARDIER PRICE PROPOSAL ASSESSMENT 54 V. REASONABLENESS TEST 63 VI. COMMENTARY ON COST DRIVERS 72 VII. SUMMARY AND CONCLUSIONS 79

GLOSSARY APPENDICES

- 2 - Final Report, August 23, 2006


EXECUTIVE SUMMARY


Executive Summary…

THE PRICE PROPOSED BY BOMBARDIER FOR THE NEW SUBWAY TRAIN IS REASONABLE, BASED UPON OUR INDEPENDENT ANALYSIS OF EXTERNAL DATA

• The price is within the range of average results from both comparative and bottom up models for North American subway train procurements

• The overall pricing is below that predicted by a model based upon US Federally Funded vehicle procurements

• The overall price is also below the escalated price of the TTC’s last new car procurement, the T1, purchased in 1992

• The pricing for spares, and special tools and test equipment are within the normal range for proportion of the overall price

• Other line items such as cab simulator, profile measurement and YMSS appear reasonable, and the pricing for the various options is also in line with industry standards

• Subjectively the price falls within the range expected, with recent reported procurement prices being both higher and lower.


THE PRICE PROPOSED BY BOMBARDIER COMPARES WELL WITH THE BENCHMARKS ESTABLISHED DURING OUR ANALYSIS

Results of Comparative Pricing Model, compared to Bombardier NST Basis Price

$2.70


$1.90

$2.00

2.10

2.20

2.30

2.40

$2.50

2.60

Average of allescalation

approaches


approaches,Competitive

OriginalProcurements

only


approaches,North AmericanProcurements

Only


approaches,North American

CompetitiveOriginal

ProcurementsOnly

Prediction basedon order size

Prediction basedon order size,

North AmericanCompetitive


Only

Component PriceModel

Ave

rage

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, C$

$

Bombardier NST Basis Price

$

$

$

$


Average per Vehicle Price, Average of all Escalation/ Conversion approaches, Co

BOMBARDIER’S PRICE COMPARES WELL WITH THE RANGE OF COMPETITIVELY PROCURED CARS IN THE NORTH AMERICAN MARKET, CONSIDERED IN TODAY’S DOLLARS

mpetitive Procurements in North America Only

CAD 0.00

CAD 0.50

CAD 1.00

CAD 1.50

CAD 2.00

CAD 2.50

CAD 3.00

CAD 3.50

CAD 4.00

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Source: Booz Allen Analysis

CTA Bombardier NST Basis price




BOOZ ALLEN HAMILTON WAS RETAINED BY THE TTC TO INDEPENDENTLY EVALUATE BOMBARDIER’S PROPOSED PRICE FOR THE NEW SUBWAY TRAINS, AND TO DETERMINE IF IT IS FAIR AND REASONABLE BY INDUSTRY STANDARDS

• Our review was performed with full independence – we had no contact with Bombardier, and received no inappropriate direction or influence from TTC

• Our analysis was based on comparing RFP and proposal documents provided by the TTC against industry standard pricing data which we collected from a range of public and peer transit agency sources



WE USED EXTERNAL DATA TO DEVELOP VEHICLE PRICE PREDICTION MODELS, ANALYSED THE PRICING DOCUMENTS PROVIDED BY THE TTC, AND PERFORMED TESTING FOR REASONABLENESS

• We developed three independent pricing models, using comparative data for similar vehicle

procurements, a bottom-up approach using vehicle price elements, and a complete-cost-of-procurement approach using US Federal Transit Administration (FTA) data

• We categorized Bombardier’s proposed pricing into groupings for comparison against external data, and also to validate overall proposal balance

• We normalized all data for equivalent scope, to adjust for escalation and for exchange rate fluctuations

• We then developed tests for reasonableness of the Bombardier pricing

− Comparison of base vehicle price with similar external procurements, and with the bottom-up pricing model

− Comparison of total vehicle price against the FTA data, and against the escalated price for TTC’s last purchase (T1 cars)

− Balance and proportionality of overall pricing

− Review of New Subway Train (NST) procurement additional line items and options against industry typical values

− Subjective comparison to some recent competitive procurements.



DESPITE THE SOLE SOURCE PROCUREMENT APPROACH, THE TTC APPEARS TO HAVE A REASONABLE PRICE – STARTING ANEW WITH A COMPETITIVE PROCUREMENT WOULD UNLIKELY BE COST EFFECTIVE

• A sole source procurement of a new type of vehicle (as opposed to a follow on order) while commonplace in the Canadian market, is unusual by wider North American practice

• However, in this case, our analysis shows that the price proposed by Bombardier for the NST is fair and reasonable by industry standards

• Reissuing the RFP as a competitive solicitation would delay the NST program by up to a year and would cause TTC (and the builders competing) significant additional costs

• There would be no guarantee that the revised price would even offset these additional procurement costs, as Bombardier’s overall price is already in the public domain, so all firms bidding will start with that as a target.


I. INTRODUCTION


Introduction…

THE TORONTO TRANSIT COMMISSION (TTC) RETAINED BOOZ ALLEN HAMILTON TO PERFORM AN INDEPENDENT REVIEW OF THE REASONABLENESS OF BOMBARDIER’S PRICE PROPOSAL FOR TTC’S PLANNED SOLE SOURCE PROCUREMENT OF 39 NEW SUBWAY TRAINS

• The TTC selected Booz Allen following a competitive process, resulting in Contract

C31PJ06855 between the TTC and Booz Allen Hamilton Inc.

• This was an assignment to an expedited schedule – 3 weeks to develop preliminary report, 5 weeks to the final report

• The majority of our efforts focused on assessing the reasonableness of the proposed pricing

• A detailed analysis of the RFP, and Bombardier’s technical and commercial proposals was not performed, as this was outside of our scope of work

− We did, however, perform a high level review of the specification, and where specific cost drivers were identified, these have been noted and are reported in Section VI

− We also performed a high level review of Bombardier’s proposal for pricing balance and to identify any significant areas of concern

• Booz Allen started work on July 18, 2006, with a kick-off conference call

• We attended a kick-off meeting in Toronto on July 21, 2006, where copies of the TTC RFP documents and Bombardier’s proposal were provided

• Additional data was provided by the TTC on July 24 and 28, and August 1, 2, 14 15 and 21, 2006.

Introduction…

WE PERFORMED OUR ANALYSIS OF THE BOMBARDIER PROPOSAL USING THE (CONFIDENTIAL) DATA PROVIDED BY THE TTC FOR OUR REVIEW AS A BASIS FOR COMPARISON WITH INDUSTRY DATA FOR SIMILAR PROCUREMENTS

• TTC documents (latest versions provided are listed)

− Request for Proposal for Supply of thirty nine new subway trains, Proposal No. P31PD05761, dated March 2006, provided on CD

− New Subway Car Technical Specification, Rev 0, dated January 2006, provided on CD

− Addendums 01 dated April 7, 2006 and 02 dated May 19, 2006, provided on CD

− T1 pricing details, provided on CD and by email

• Bombardier documents provided by TTC (latest versions provided are listed)

− Revised Proposal to the Toronto Transit Commission for the Supply of Thirty Nine New Subway Trains, Sections 1-3, dated July 28, 2006, provided on CD

− Documents 00300 and 00461 dated July 28, 2006, provided by email

− Revised 00300 dated August 11 and 00700 dated August 9 provided by email

− File entitled Proposal Breakdown for Consultant, dated July 25, 2006, provided by email

− Impact matrix for noteworthy items dated July 5, 2006, provided in hard copy.

OUR TEAM HAD NO CONTACT WITH BOMBARDIER OR ANY OTHER CARBUILDER OR SUBSUPPLIER RELATED TO THIS EFFORT DURING THIS CONTRACT, AND WE RECEIVED NO INTERFERENCE OR ATTEMPTS TO INFLUENCE OUR FINDINGS FROM TTC STAFF



Introduction…

WE STARTED BY SEPARATING OUT INDIVIDUAL ELEMENTS IN THE BOMBARDIER PRICE PROPOSAL TO PERMIT COMPARATIVE ANALYSIS WITH EQUIVALENT INDEPENDENT DATA FROM EXTERNAL SOURCES

• We separated the Bombardier price into its major elements

− Base price for the 39 trains (234 cars), together with price elements typically lumped with quoted vehicle procurement prices, such as spares, and Special Tools and Test Equipment (STTE)

− Those price elements which are unique to the TTC procurement, or which are not typically lumped with vehicle pricing, such as the test track, simulator, computer based training CBT, GST and Provincial tax etc.

− Options – those planned to be exercised were included in the basis, those not planned for immediate inclusion were considered as stand alone items

• The majority of our analysis was performed on the vehicle base price including the TTC allowance for bonding and escalation, plus the typically included line items and options to be exercised at award, adjusted to a per vehicle price – we have termed this the “NST Basis”

• We also performed limited reasonableness checks on the pricing elements unique to the NST procurement - we have termed these elements the “NST extras”

• Finally, we evaluated the proposed option prices for reasonableness.


Introduction…

WE THEN COMPARED THE NST BASIS DATA FROM THE BOMBARDIER PROPOSAL WITH THE RESULTS OBTAINED FROM THREE INDEPENDENT PRICING MODELS WHICH WE DEVELOPED TO TEST THE REASONABLENESS OF THE PRICE PROPOSAL

• Comparative Price Model

− This model collates complete vehicle prices from a range of equivalent subway vehicle purchases worldwide, averaged to a per vehicle basis and normalized to the complexity level of the NST

− The price data was escalated and converted to Canadian funds using various methods, to arrive at a range of predicted results

• Component Price Model

− This model projects a total vehicle price from our database of individual subsystem and contract line item costs, combined to predict average and high/low combinations

− This model only uses costs for North American transit vehicles, appropriately escalated and converted

• FTA TERM Model

− This model uses historical cost data obtained from the US Federal Transit Administration (FTA) Transit Economic Requirements Model (TERM) for Heavy Rail Projects to predict a vehicle price

− This is the only model to be compared with the sum of the NST Basis and NST extras e.g. the total proposed price for the NST, per vehicle.

Introduction…

WE COMBINED THE RESULTS FROM THE VARIOUS PRICING MODELS TO PROVIDE A RANGE OF REASONABLE PRICING FOR COMPARISON AGAINST THE BOMBARDIER PROPOSAL ELEMENTS

• The results from the Comparative Price and Component Price models were used to establish

a range of reasonable values, and the NST basis price was assessed against this range

• The results from the FTA TERM model established a range of reasonable values for the total proposed price, i.e. the sum of the NST basis and the NST extras

• The individual line items in the NST extra category, where appropriate, were matched against available comparative data to make a reasonableness determination.

Comparative Price Model

Component Price Model

FTA TERM Price Model

Range of Reasonableness

Bombardier Proposal

Result Reasonableness Test



Introduction…

WE ALSO PERFORMED A MORE SUBJECTIVE ANALYSIS OF BOTH THE RFP DOCUMENTS AND THE PRICE PROPOSAL, TO IDENTIFY UNUSUAL COST DRIVERS AND TO ASSESS THE BALANCE OF THE PROPOSAL

• We performed a high level review of both the Commercial and Technical Provisions of the

TTC RFP package, to identify any unusual factors which would have an impact (positive or negative) on the overall price for the NST

• We considered the relative values of the various line items in Bombardier’s price proposal, against typical industry values for spares, and STTE

− This review checked for proper balance of the proposal, to ensure appropriate attention has been paid to all major aspects.


Introduction…

AN ANALYSIS OF THIS NATURE NECESSARILY REQUIRES ASSUMPTIONS TO BE MADE ABOUT SCOPE WHEN COMPARING VEHICLE PRICES FROM ELSEWHERE

• There is very limited data available for vehicle prices in the Canadian Subway car market to

serve as a comparison

− TTC’s last original (not follow-on) purchase (of T1 cars) was in 1992

− Montreal has not purchased subway cars in 30 years (the current negotiations with Bombardier were not considered in the data as there is not yet a confirmed Contract Price)

− The Vancouver Skytrain system has only limited relevance due to the different technical requirements

• Likewise the US Subway car market is relatively small, with only five properties procuring new cars in the last 10 years (Atlanta, Boston, Chicago, New York and Washington)

• Due to this market limitation we included data from overseas procurements, although there are some risks on making direct comparisons to the North American market, due to different requirements, practices, labour costs etc.

• We did make some effort to normalize external data to compensate for relative complexity compared to the NST, but no single reliable factor could be found to adjust for North American conditions.


Introduction…

WE ALSO MADE SOME ASSUMPTIONS REGARDING THE IMPACT OF EXCHANGE RATES AND ESCALATION ON PRICES

• Exchange rates play a major role in vehicle pricing, and the significant change in value of the

(Canadian) Dollar against currencies such as the US$, Euro and Yen can skew data quite significantly

− The real cost of a US sourced component is now 1/3 less than it was four years ago, due to the exchange rate fluctuation, and relatively equivalent inflation in the two countries

− For a Japanese sourced component, the real cost is reduced by a quarter

− Component costs from Euro zone countries, however, have seen minimal reduction due to exchange rate shifts

• Escalation factors also vary widely by industry and country, with significantly different changes over an equivalent time period for one country compared to another, and between industries within the same country

• Our approach to dealing with these issues was to use exchange rate histories and escalation factors from recognized financial institutions and using standard indices

− Organisation for Economic Co-operation and Development Producer Price Index

− National Bank data

− Standard sources for historical exchange rates.

Introduction…

FINALLY, WITH THE AGGRESSIVE SCHEDULE, WE ASSUMED THAT THE CONFIDENTIAL INFORMATION PROVIDED BY THE TTC FOR OUR REVIEW IS BOTH ACCURATE AND COMPLETE

• All TTC provided data was taken at face value, only using clarifications or explanations

provided by the TTC project team staff

• Our analysis was based solely on the data provided, and no effort was made on our part to validate this input data

• Therefore Booz Allen does not make any representation or warranties with respect to the accuracy of any information provided by Toronto Transit Commission, or any other third party, which may be incorporated into this deliverable or upon which this deliverable is based.

• Consequently Booz Allen hereby disclaims any responsibility for damages or losses that may arise from any errors or inaccuracies contained in this deliverable which may be the result of data provided by Toronto Transit Commission or any other third party.

ALL TTC PROVIDED DATA WAS, AND WILL BE, HELD CONFIDENTIAL BY BOOZ ALLEN. ACCESS WAS ONLY GRANTED TO BOOZ ALLEN PROJECT TEAM MEMBERS ON A NEED TO KNOW BASIS



II. DATA PRESENTATION


Data Presentation…

BOOZ ALLEN’S APPROACH USED AVERAGE PER-VEHICLE PRICES AS THE PRIMARY BASIS FOR COMPARISON

• This approach permits an appropriate comparison of like equipment

• This eliminates the need to consider powered/unpowered, cab or trailer cars separately, and averages the equipment cost over all cars in a consist

• It allows unit train consists, single cars and married pairs to be compared on the same basis

• This provides the simplest way to normalize results from orders of widely varying quantities



WE OBTAINED THE DATA USED FOR COMPARISON FROM A RANGE OF INDEPENDENT INDUSTRY SOURCES

• Wherever possible we used published data

− Press releases

− Trade press articles

− Work performed for clients which is not confidential (e.g. FTA TERM data)

• We also drew from internal sources within Booz Allen

− Component cost databases

− Work performed for other clients (client and project names must remain confidential)

• We obtained bid sheets and price data from a range of recent North American subway car procurements

− The source of some of this data must remain confidential, at the request of the agencies providing it

• We have provided the data in the various Appendices to this report, within the constraints of confidentiality agreements which exist with our other clients.



WE USED THE DATA TO BUILD THREE INDEPENDENT PRICING MODELS, AND TO POPULATE OTHER REASONABLENESS TESTS

• Comparative Price Model – this model is based on average per vehicle prices collected

from public domain data from subway vehicle procurements around the world since 1989. It is used to analyze price trends and to determine average, normalized prices

• The Component Price Model uses detailed price breakdown data from North American subway vehicle procurements, supplemented by some subsystem prices from other transit vehicle modes. This model uses this data to build up a total vehicle cost from its base elements

• The FTA TERM data model uses data from the US Federal Transit Administration for actual vehicle procurement project costs. This data was collected over the past 34 years, and is a useful measure of the complete cost of a vehicle procurement

• Other data was used to perform reasonableness tests

− Escalated T1 prices from 1992

− Typical prices for the non-core items such as cab simulators

• Finally we used data from some recent procurements (including, in some cases, the prices from losing bidders) for comparison against the Bombardier prices, and to illustrate competitive procurements for comparative purposes.



WE ADJUSTED OUR DATA TO ACCOUNT FOR PRICE ESCALATION BETWEEN THE ORIGINAL DATA AND 2006 USING STANDARD INDICES

• Prices worldwide have escalated by varying degrees over the period - we used data from reputable international financial organisations

− Producer Price Indices (PPI) rather than Consumer or Retail Price Indices (CPI, RPI) were used wherever possible, as they are more reflective of industry price changes

− For the United States, the US Department of Labour (Bureau of Labour Statistics) reports PPI data for the specific category “Railroad rolling stock manufacturing, street, subway, trolley and rapid transit cars” – this was the index applied to US prices

− For other countries, including Canada, we used PPI data from the Organisation for Economic Co-operation and Development (OECD)

− As the OECD data only covers the period through 2004, we used PPI data from national banks (Bank of Canada Core CPI, European Central Bank, Bank of Japan, Korean National Statistical Office) for the final two years

• We first escalated prices quoted in foreign currency, and then converted the results to Canadian funds

• For the Comparative price model, escalation factors were applied in the country of origin of the carbuilder, and also in the country of main manufacture

• Details of the escalation factors used can be found in Appendix 1.



WE ADJUSTED ALL PRICES IN FOREIGN CURRENCIES TO CANADIAN FUNDS, TO ALLOW DIRECT COMPARISONS, USING STANDARD EXCHANGE RATE DATA

• Historical exchange rates were obtained from the currency services Oanda and XE.com

• Prices were converted to Canadian funds using the prevailing rate (averaged by year) at the time of either original price, or with the price escalated to 2006 values

• The exchange rate factors used are tabulated in Appendix 2.


II.1 COMPARATIVE PRICE MODEL


Data Presentation…Comparative Price Model…

THE COMPARATIVE PRICE MODEL IS BASED ON DATA COLLECTED FROM 86 SUBWAY VEHICLE PROCUREMENTS FROM AROUND THE WORLD DURING THE PERIOD 1989 TO DATE

• The procurements were selected for reasonable equivalence to the NST Project – i.e.

subway trains rather than light rail or commuter rail trains

• Data was collected primarily from North America and Europe, but projects in South America and Asia were also included

• Data was generally obtained from published sources

• No direct manufacturer contact was made, to avoid any possible contamination of the data

• Only limited contact was made with transit agencies due to the aggressive schedule for this project

• Data collected included location, builder, car classification, quantity, date of order, train consist and any unusual features or cost drivers

• The data table for this model is presented in Appendix 3.



WE NORMALIZED THE PRICES FOR EQUIVALENCE WITH THE NST USING A COMPLEXITY FACTOR

• Prices for trains more complex than the NST were reduced by a factor to compensate for the added complexity

− Rubber tired train prices were factored by 0.91 to compensate for the added cost of rubber tires on the trucks, and the relatively small market share for such trains

− Contract prices which included maintenance services provided by the carbuilder were factored by 0.95 or 0.91, depending on the period covered

• The prices for trains simpler than the NST were similarly increased

− More basic car prices in emerging markets, and “light metro” designs such as Vancouver Skytrain were factored by 1.11, to compensate for the absence of advanced diagnostic systems, high levels of reliability and simpler or absent passenger information and communications systems. Market forces and local assembly using cheaper labour also play a part in reducing the prices of these cars

− Smaller car prices, such as those found in some lines in Paris, London, Chicago and Boston, were factored by 1.11, to compensate for smaller carbodies, fewer doors and seats, and reduced propulsion, braking and HVAC capacity

− Articulated car prices were factored by 1.25 to compensate for the reduced quantity of trucks and other shared equipment, as well as the fact that such cars are also shorter, and hence the issues discussed above also apply.



AFTER NORMALIZING THE DATA, WE APPLIED ESCALATION FACTORS TO CONVERT THE PRICES TO 2006 LEVELS, AND CONVERTED TO CANADIAN FUNDS WHERE APPROPRIATE

• We applied escalation factors using two parallel methods

− Prices escalated at the rate appropriate to the home country of the carbuilder, on the basis that profits and much of the value in the price would be measured at the headquarters

− Escalation applied at the rate appropriate to the country where most of the manufacture of the trains occurred, on the basis that labour and raw materials costs would be most affected by this rate. Where a car was partly built in one country and finished in another, we split the price 50/50 and applied escalation at the rate appropriate to each country

• Similarly, we applied exchange rate conversion using parallel approaches

− Original price paid at time of purchase, converted from originally reported currency to C$ using rates at the time of the original purchase – this gives an indication of relative prices at the time of the order, and allows trends to be established in C$, as well as allowing an insight into how a price has changed independent of exchange rate fluctuations

− Escalated price (by either of the above methods), converted to C$ at current exchange rates – this permits equivalent comparison with the NST at today’s prices.



THE RESULTS FROM THE VARIOUS ANALYSIS APPROACHES WERE PLOTTED ON SCATTER CHARTS, USING A TIME BASIS

• Price converted to Canadian funds at the time of order

• Price escalated to 2006 values in home country of carbuilder, and country of main manufacture, then converted to C$

• Price converted to C$ in home country of carbuilder, and country of main manufacture, then escalated to 2006 values

• Average of the four escalation approaches

• Repeat of above analyses, but considering only competitive procurements of new car orders (follow on and option orders excluded)

• Repeat of above analyses, but considering only North American procurements

• The average results of the four escalation approaches were also plotted against an axis of number of vehicles ordered, using a logarithmic trend line.

THE MAJOR RESULTS FROM THE MODEL ARE PRESENTED ON THE FOLLOWING PAGES, THE REMAINDER CAN BE FOUND IN APPENDICES 4-11. ALL RESULTS ARE REPORTED AS AVERAGE PRICE PER VEHICLE, IN MILLIONS OF C$

Data Presentation… Comparative Price Model…

THE AVERAGE PRICE FOR A SUBWAY CAR HAS REMAINED FAIRLY CONSTANT IN RECENT YEARS, INDICATING THAT COST INCREASES ARE THE RESULT OF PPI CHANGES. THE WIDE SCATTER OF THE DATA REFLECTS VARYING LEVELS OF COMPLEXITY AND ORDER SIZES

Average per Vehicle Price, in C$ at time of Order, no escalation

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ALL ESCALATION/CONVERSION APPROACHES WERE AVERAGED TO OBTAIN THE MOST STABLE RESULT, REDUCING THE IMPACT OF ANOMALOUS ESCALATION FACTORS OR EXCHANGE RATES, RESULTING IN A MEAN PRICE OF $2.22M*

Average per Vehicle Price, Average of all Escalation/ Conversion approaches

CAD 0.00

CAD 0.50

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* - See Appendices 4-11 for supporting analysis



AVERAGING THE ESCALATION/ CONVERSION APPROACHES FOR NORTH AMERICAN DATA GIVES SIMILAR RESULTS, WITH A HIGHER RANGE – THE MEAN PRICE FROM THIS ANALYSIS IS $2.42M

Average per Vehicle Price, Average of all Escalation/ Conversion approaches - North

American Orders Only

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CONSIDERING ONLY COMPETITIVE PROCUREMENTS OF NEW CAR DESIGNS WORLDWIDE RETURNS A RANGE OF DATA WITH A MEAN OF $2.29M

Average per Vehicle Price, Average of all Escalation/ Conversion approaches, Competitive Procurements Only

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FURTHER NARROWING THE DATA TO CONSIDER ONLY NORTH AMERICAN COMPETITIVE PROCUREMENTS OF NEW CAR DESIGNS GIVES THE HIGHEST MEAN RESULT, $2.50M

Average per Vehicle Price, Average of all Escalation/ Conversion approaches, Competitive Procurements in North America Only

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CTA



THE RELATIONSHIP BETWEEN UNIT PRICE FOR A VEHICLE AND THE NUMBER OF VEHICLES ORDERED PREDICTS THE PRICE FOR A 234 CAR ORDER TO BE AN AVERAGE OF $2.05M*

Average per Vehicle Price using average of all Escalation/ conversion approaches, vs size of order

y = -0.2748Ln(x) + 3.5482

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* - X = 234 CARS, THEREFORE PRICE, Y, = -0.2748*LN(234) + 3.5482= C$2.05M, THE WIDE SCATTER ON THE DATA SUGGESTS THAT THIS BE CONSIDERED AN AVERAGE VALUE



THE SAME ANALYSIS, FOR NORTH AMERICAN PROCUREMENTS ONLY, PREDICTS THE PRICE FOR A 234 CAR ORDER TO BE AN AVERAGE OF $2.32M* BASED ON A SMALL SAMPLE SIZE

Average per Vehicle Price using average of all Escalation/conversion approaches, vs size of order - North American Competitive Procurements Only

y = -0.3364Ln(x) + 4.0688

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* - X = 234 CARS, THEREFORE PRICE, Y, = -0.3318*LN(234) + 4.1299= C$2.32M, THE WIDE SCATTER ON THE DATA SUGGESTS THAT THIS BE CONSIDERED AN INDICATIVE VALUE



II.2 COMPONENT PRICE MODEL


Data Presentation…Component Price Model…

WE “BUILT” A TOTAL VEHICLE PRICE USING PRICE INFORMATION FOR SEPARATE COMPONENTS/ LINE ITEMS FROM RECENTLY PURCHASED RAIL VEHICLES

• By using a bottom-up approach, we ensured that the overall vehicle price estimate included

the correct vehicle component mix to accurately reflect the NST configuration

• We gathered data regarding component prices from sources including bid breakdowns, spare component price sheets, and engineering cost estimates

• We also gathered data on other project prices, such as engineering, project management, manuals, and spares

• A vast majority of the data was collected from recent subway car purchases that most closely resembled TTC’s NST procurement, both in terms of order size and vehicle type

• We used a broader set of projects to compare the relative pricing of hardware (vehicles only) to other contractual pricing (e.g. contract management, training, manuals)

• The main sources of price information came from subway car projects for the major US transit properties

• Details are included in Appendix 12. Project titles and owners have been suppressed as much of this data is confidential.



WE EXTRACTED THE PRICES FOR VEHICLE COMPONENTS AND CONTRACTUAL ELEMENTS FROM THE VEHICLE PROCUREMENT DATA

• We analyzed the TTC Specifications to determine the configuration and quantities of major

components and subsystems, such as doors, propulsion, and brakes, within the NST cars

• We compared the equipment specified for the NST car to the equipment used for the price analysis in order to ensure equivalence

• Most of the equipment and contractual price data was extracted from bid sheets for new subway car projects contracted after 1998

• Where the available data was not sufficient to accurately determine equipment or project prices, data from other projects, such as LRV orders, engineering estimates, and overhaul projects was used.



THE DATA WAS ESCALATED TO TODAY’S VALUES AND ANALYSED TO ESTABLISH A PREDICTED RESULT

• We escalated the data for all equipment and services to reflect the prices in 2006 C$ and

used the results to calculate the high, low, average, and median price of each component or vehicle subsystem and each contractual price component

• We normalized the price of components on each vehicle to reflect the total number of each component, in each train, divided by the number of vehicles in each train – i.e. to achieve a per-vehicle basis

• We calculated the total price of the vehicle components, added this value to the sum of contractual prices, tabulated the data, and analyzed it to determine:

− Overall vehicle price for a single vehicle

− Ratio of individual price components, such as spare parts, manuals, and special tools to the overall vehicle price.


Data Presentation… Component Price Model…

THE COMPONENT PRICE MODEL PREDICTS THE AVERAGE TOTAL PRICE FOR THE VEHICLE TO BE $2.47M, AND PROVIDES AVERAGE RELATIONSHIPS BETWEEN BASE VEHICLE PRICES AND OTHER LINE ITEMS TYPICALLY INCLUDED IN CONTRACTS

• We calculated the average total price of a vehicle using the average price total of all vehicle components and subsystems and the average price total of the other contractual costs

• The contractual costs add to the overall cost of each vehicle, examples for comparison include

− Spare Parts: 4% of total contract value

− Special Tools, Test, and Diagnostic Equipment: 3% of total contract value

• The detailed results from the model are presented in Appendices 13 and 14.


II.3 FTA TERM DATA MODEL

Data Presentation…FTA TERM Data Model…

THE FTA TERM MODEL USES DATA COLLECTED FOR THE UNITED STATES FTA FOR HEAVY RAIL CONSTRUCTION PROJECTS WHICH RECEIVE FEDERAL FUNDS – THE COST OF THE VEHICLES IS ONE ELEMENT OF THE MODEL

• The data set is restricted in scope, and hence the model has some limitations

− Only contains projects within the United States

− Only captures those projects which received Federal Grants

− Only contains data for procurements where vehicles were part of a much larger project involving construction or extension of a subway line

− Major procurements such as those for New York City are absent (no Federal funding)

− Does include total (external) procurement cost to the agency for the vehicles



Data Presentation… FTA TERM Data Model…

WE USED THE DATA IN THE TERM MODEL FOR HISTORICAL VEHICLE COSTS*, ADJUSTED FOR ESCALATION, AND THEN CONVERTED INTO CANADIAN FUNDS, TO REACH A DATASET FROM WHICH A BEST FIT INFLATION LINE COULD BE EXTRACTED

• The FTA TERM data contains 17 data points, spanning the period 1972 to 2001

• The data points represent the reported unit costs per vehicle of each order – these costs are inclusive of all peripherals, such as spares, training, STTE, financing etc.

• No normalization of the data was performed

− US market subway cars are similar enough in scope to the NST

− Complexity has increased, but this is reflected by the steady increase in prices above the background inflation level

• All costs were escalated to mid-2006 values using Mean’s Construction Index

− Average annual rate of approximately 2.5% since the mid-eighties

• 2006 costs were then converted to Canadian Funds using an exchange rate of C$1 = US$0.8705**

• The data points were plotted and the best fit line determined using the linear regression technique

• The linear regression line was projected forward to 2006 to deliver the model result.

* - See Appendix 15 for data

** - See Appendix 2 for data


THE FTA TERM MODEL PROJECTS AN ALL-INCLUSIVE VEHICLE PRICE OF $2.8M, BASED UPON THE INFLATION OF CAR PRICES IN THE US MARKET, IN REAL TERMS, SINCE 1971

Heavy Rail Vehicle Costs: 1970-2001

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

1971 1976 1981 1986 1991 1996 2001 2006

Mill

ions

of C

$200

6




THE OUTPUT FROM THE FTA TERM MODEL IS TREATED DIFFERENTLY FROM THE OTHER RESULTS, WITH THE BASIS FOR COMPARISON BEING THE TOTAL PER CAR PRICE FOR THE NEW SUBWAY TRAINS

• The data points reported in the FTA TERM model include all reported costs associated with

the procurement

• The result from this model is therefore considered against the total per car cost for TTC, including all contract line items – this approach is different to that used for the other models, but offers a separate, valuable insight

• No adjustment of the data was performed, except where an inaccuracy was found that affected the results

• It should be noted that the results from this model are regarded as the least reliable of the three approaches

− There is a limited data set

− The data contains other cost elements

− It covers an extended time period – it is thus more an indicator of how technological changes have inflated vehicle prices over the past 25 years.



A SIMILAR COMPARISON CAN BE MADE BY ESCALATING THE PRICE OF TTC’S ORIGINAL PURCHASE OF T1 CARS TO 2006 VALUES

• The price reported by TTC for the original 1992 order of 216 T1 cars was an average of

$2.158m per car

− Includes AC propulsion option for per car price, Contract spares, Warranty spares, STTE, and TTC allowance for bonding and escalation

− Excludes PST, GST and equivalent of NST extras

• We escalated this price to 2006 $, included the NST extras for equivalence (cab simulator, CBT, test track, etc.) to obtain a result of $2.971m per car

− This analysis does not consider the impact of incremental technical changes from T1 to NST

− Full details are contained in Appendix 16.


III. ANALYSIS


Analysis…

THE VARIOUS PRICING MODELS SHOW QUITE GOOD AGREEMENT, GIVING CONFIDENCE IN THE APPROACH USED TO PREDICT THE NST BASE PRICE

• The major results from the Comparative Price Model for worldwide data show good

agreement

− The average of all escalation approaches returns a mean result of $2.22m, while considering only competitive procurements of new car designs results in $2.29m

− The prediction based on the order size is $2.05m, with wide scatter

• The major results for the North American market also show good agreement, with the results offset from the worldwide data showing the added costs in this market

− Considering North American procurements only results in $2.42m, this increases to $2.50m when sole source and follow on procurements are removed

− The “premium” for North American competitive procurements increases the order size based prediction to $2.32m, again with wide scatter

− The result from the Component Price Model is $2.47m, in line with the results from the Comparative Price Model ($2.42-$2.5m), based on North American data only

• All price results are subject to a conservative ±5% margin of error, due to the nature of the market and the analysis performed.

Analysis…

THE COMPARATIVE AND COMPONENT PRICING MODEL RESULTS CONSERVATIVELY HAVE AT LEAST A 5% MARGIN OF ERROR, PROVIDING A PRICE RANGE TO BE COMPARED WITH THE EQUIVALENT DATA FROM THE BOMBARDIER PROPOSAL

Results of Comparative Pricing Model, with 5% error margin

$1.90

$2.00

$2.10

$2.20

$2.30

$2.40

$2.50

$2.60

$2.70


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Analysis…

THE RESULTS FROM THE FTA TERM MODEL AND ESCALATED T1 MODEL ARE HIGHER, AS THEY INCLUDE ALL CONTRACT COSTS – THE PROPER COMPARISON IS WITH THE OVERALL BOMBARDIER PRICE

• The FTA TERM model result is $2.80m

− We consider this model to provide the least reliable results of all the approaches, due to the limitations on the input data

• The result achieved by escalating the 1992 T1 price is $2.97m


Results of TERM Pricing Model and Escalated T1 models, with 5% error margin

$2.20

$2.40

$2.60

$2.80

$3.00

$3.20

FTA TERM model Escalated T1

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Analysis…

THE COMPONENT COST MODEL PROVIDED USEFUL DATA FOR EVALUATING THE BALANCE OF THE BOMBARDIER PROPOSAL FOR THE OTHER CONTRACT LINE ITEMS

• Typical values as a proportion of the total can be used to guide decisions about balance

− Spare Parts: 4%

− Special Tools, Test, and Diagnostic Equipment: 3% Results of Component Price Model for Proposal Balance, with 5% error margin

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

Spares STTE



IV. BOMBARDIER PRICE PROPOSAL ASSESSMENT


Bombardier Price Proposal Assessment…

WE ESTABLISHED A COMMON BASIS FOR COMPARISON, BY EXTRACTING LINE ITEMS FROM THE BOMBARDIER PRICE PROPOSAL

• All analysis was performed on the version of Forms 00300 and 00461 received by email on

August 2, 2006 and the updated TTC allowance for bonding and escalation costs received August 22, 2006

• Our overall pricing analysis included those options that TTC plans to execute with the base award (per email from TTC of August 2, 2006)

− Option 5 - Additional spares

− Option 6 – Battery charger

− Option 9a – Active route map

• All prices were converted to an average per vehicle basis, to allow direct comparison with the results from the various models

• We extracted a price for comparison against the NST basis results from the comparative and component price models

• We also extracted a price for comparison against the TERM model results

• An equivalent price was determined for comparison against the escalated T1 price

• Finally, we identified price data for the NST extra line items and options which are to be exercised as part of the base award.

Bombardier Price Proposal Assessment…

WE SEPARATED THE NST PRICE INTO PRICE GROUPINGS FOR COMPARISON WITH THE MODELS/ OTHER EXTERNAL PRICING DATA AND SUBJECTIVE ASSESSMENTS

Description QTY

(A)Unit Price

(Per Train SetExcluding

AccessibilityFeatures)

OntarioProvincialSales Tax at 8% on

(A)

FederalGoods

andServicesTax at 6%

on (A)and (B)

Total ExtendedPrice (CAD $)

Six Car Subway Train Sets and all associated Work per the Particular Specifications 39 12,804,677$ 1,024,374$ 768,281$ 569,295,939$

TTC Allowance for Bonding and Escalation 1 44,052,632$ 3,524,211$ 2,643,158$ 50,220,000$ Sub Total 619,515,939$

Additional Line Items included in NST Basis price for comparison with industry wide procurements 1 8,437,116$ 674,969$ 506,227$ 9,618,312$

Additional Line Items NOT included in NST Basis price for comparison with industry wide procurements

1 18,482,664$ 1,478,613$ 1,108,960$ 21,070,237$

$650,204,489Options included in base award and NST Basis price 1 21,215,942$ 1,697,275$ 1,272,957$ 24,186,174$

Options included in base award and NOT in NST Basis price 1 348,193$ 27,855$ 20,892$ 396,941$

GRAND TOTAL OPTIONS IN BASE AWARD 24,583,115$ GRAND TOTAL PRICE $674,787,604

NST Basis per car price 2,449,094$ 2260835.303

NST Total Contract per car price 2,529,568$

GRAND TOTAL PROPOSAL PRICE

DERIVATION OF NST BASIS AND TOTAL CONTRACT PRICES



Bombardier Price Proposal Assessment …

THE NST BASIS PRICE OF $2.449M* INCLUDES THOSE ITEMS TYPICALLY FOUND IN REPORTED PRICING FOR SUBWAY VEHICLE PROCUREMENTS ELSEWHERE, AND EXCLUDES FACTORS UNIQUE TO THE TTC SITUATION

• We included the main cost elements in the proposal

− Price for actual train sets, plus the active route map option

− Bonding and Escalation costs – TTC has identified an allowance for these values, which have been included to achieve the firm fixed price. (Note the actual value may vary depending on actual inflation rates over the course of the contract)

− Consumable spare parts, both base and planned options – spares costs are typically included in overall published prices

− STTE – again, these items are typically within the scope of a procurement price

• We excluded cost elements which do not typically apply to procurements elsewhere

− Federal and Provincial taxes – most transit agencies outside of Canada are typically exempt from taxation on procurement of goods and services

− The cab simulator, additional computer based training, subway profile measurement services, YMSS, Contractor’s test track and new battery charger system are all items unique to this procurement, that do not belong in a comparative analysis.



THE NST TOTAL PRICE OF $2.530M* INCLUDES ALL CONTRACT LINE ITEMS AND OPTIONS PLANNED AT AWARD

• The total price, without taxes, includes all line items and planned options, and is reflective of the total cost of procurement for TTC for comparative purposes

− This value is comparable to the results reported from the FTA TERM model, which uses data on actual project costs to a transit agency

− Taxes are excluded as most US transit agencies are exempt from sales tax on procurements (there is no Federal sales tax, and most individual states do not assess sales taxes on governmental organizations – California is one exception, but the rates are around half those applicable to TTC)

− This value will also be used to compare against the escalated cost of the T1 cars.


NOTE THAT PRICES QUOTED BY OTHER MANUFACTURERS MAY NOT INCLUDE THESE ITEMS, AND, IN FACT, MAY ONLY BE REPRESENTATIVE OF THE CAR-ONLY PRICE, WHICH IS $2.134 FOR THE BOMBARDIER NST PROPOSAL




THE NST EXTRA LINE ITEM PRICES*, CONSIDERED AS A PACKAGE, APPEAR TO BE REASONABLE FOR THE ITEMS WE ARE ABLE TO EVALUATE

• The cab simulator price appears high, although the requirements are complex

− We have found data averaging around 33% to 50% of Bombardier’s price for the simulator alone**

• Based upon our experience with geometry/ clearance measurement systems the price for the subway profiles measurement service appears reasonable for the TTC system

• The price for the Yard Maintenance Support System appears to be low for the expected scope of work. This is not a car builder primary expertise and has to be subcontracted with most of the risk still resting on the contractor. The YMSS is complex with lots of interfaces that will have to be made to work together – high risk

• The option price for the active route maps appears to be low for the expected scope of work

• The option price for the New Battery Charger System appears to be reasonable for this item.

* - See Appendix 19 for data, ** - See Appendix 20 for data



WE ARE NOT ABLE TO PROVIDE AN OPINION ON THE FOLLOWING NST EXTRA LINE ITEM PRICE

• The price for work associated with the Contractor’s Test Track

− Without knowing the scope of work (the proposal contains limited information), we are unable to comment on this line item.

• The price for work associated with the Computer Based Training

− Without knowing the scope of work (the proposal contains limited information), we are unable to comment on this line item.



THE OVERALL PROPOSED PRICE (WITHOUT TAXES) IS $592M, AND OUR ANALYSIS INDICATES THAT THE PROPOSAL APPEARS TO BE WELL BALANCED

• The price for Spares (base and option) at 3.7% is reasonable compared to the 4%

industry average value

• The price for STTE at 1.1% is low by industry standards, which typically average 3%

• We reviewed the limited price breakdown provided by Bombardier (“Price Breakdown for Consultants”) against the cost information we had readily available from the component cost model

− For an equivalent grouping of items, the price using component pricing model data was 18% higher than that from Bombardier*

* - See Appendix 21 for details



THE OPTION PRICING LINE ITEMS* APPEAR, IN GENERAL, TO BE REASONABLE

• The price for additional train sets (Options 1a and 1b) reflects a reduction compared to

the base contract, which appears reasonable due to the amortization of design etc. costs over the base cars

• The price reduction for alternative delivery of the cars (Option 2) appears reasonable

• The incremental cost for testing at the Contractors test track (Options 3 and 4) is negligible per car, and thus reasonable

• The pricing for the extended IT support services (Option 7) appear high at first glance, but are likely subcontracted, and distorted by the duration of the extensions

• The pricing for the scale models (Option 8) appears reasonable, given the requirements and custom nature of the required work

• The pricing for additional saloon cameras (Option 10) is for 8 additional specialized cameras plus associated software, and appears to be reasonable

• We are unable to clearly determine the required quantity of backlit advertisement cards, given the exercising of Option 9, and therefore cannot comment on the price.

* - From Bombardier Proposal, Form 00461


V. REASONABLENESS TEST


Reasonableness Test…

WE ESTABLISHED AN ARRAY OF REASONABLENESS TESTS TO APPLY TO THE MAJOR BOMBARDIER PRICE ELEMENTS

• We used data from the three independent models to compare against data extracted from

Bombardier’s pricing

• All data used an equivalent basis – 2006C$, averaged per equivalent vehicle

• We considered the pricing to be reasonable if it fell within the reasonableness range, which is defined as the mean result, with a 5% margin of error

• We assessed the Bombardier pricing against the following tests:

− Test 1 – NST basis price vs. results from Comparative and Component models − Test 2 – Total proposal price vs. TERM model and escalated T1 price − Test 3 – Verification for balance/ proportionality − Test 4 – Review of NST extras and options against industry typical values − Test 5 – Subjective comparison to some recent competitive procurements, and the

range of bids often received in response to these procurements


THE RESULTS FROM THE COMPARATIVE AND COMPONENT PRICE MODEL TESTS (TEST 1) INDICATE THAT BOMBARDIER’S PROPOSAL IS INLINE WITH THE NORTH AMERICAN RESULTS, ALTHOUGH HIGHER THAN WORLDWIDE DATA WOULD SUGGEST

Results of Comparative Pricing Model, compared to Bombardier NST Basis Price

$1.90

$2.00

$2.10

$2.20

$2.30

$2.40

$2.50

$2.60

$2.70


approaches




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Bombardier NST Basis Price



THE RESULTS FROM THE FTA TERM AND ESCALATED T1 MODEL TESTS (TEST 2) SHOW THE BOMBARDIER PRICE TO BE SIGNIFICANTLY BELOW THE TERM MODEL, AND BELOW THE ESCALATED T1 PRICE

Results of TERM Pricing Model and Escalated T1 models, with 5% error margin

$2.20

$2.30

$2.40

$2.50

$2.60

$2.70

$2.80

$2.90

$3.00

$3.10

$3.20

FTA TERM model Escalated T1

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Bombardier NST Price



THE RESULTS FROM THE PROPOSAL BALANCE TEST (TEST 3) INDICATE MOST ASPECTS ARE BALANCED, WITH THE ALLOWANCE FOR STTE BEING LOWER THAN EXPECTED

Results of Component Price Model for Balance, with 5% error margin

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

Spares STTE

Model Prediction

Bombardier Price




THE REASONABLENESS TEST FOR THE OVERALL CAR PRICING INDICATES THAT BOMBARDIER’S PRICE IS WITHIN REASONABLE LIMITS

Test Model Result Bombardier comparison - value Bombardier

within range ? 1a - Comparative Price Model

Average: $2.20-$2.43m NST Basis $2.449m Yes

1b - Component Price Model $2.47m NST basis $2.449m Yes

2a - FTA Term model $2.8m NST Total $2.529m Yes 2b - Escalated T1 model $2.623m NST Total $2.529m Yes

3a – Balance Spares – 4% STTE – 3% Line items in proposal 3.7%

1.1% Yes

(Low)

3b – Balance – price breakdown*

$5,067,100/ train

Certain items in Price Breakdown for Consultants

$4,302,165/ train (Low)

* detailed prices suppressed due to commercial sensitivity



THE REASONABLENESS TEST (TEST 4) FOR OTHER MAJOR LINE ITEMS AND OPTIONS THAT WE CAN EVALUATE INDICATES THAT BOMBARDIER’S PRICE IS WITHIN REASONABLE LIMITS

Item Bombardier within range ?

Simulator No (High) Subway profile measurement services Yes

YMSS (Low) Active route map option (Low) Option price for the New Battery Charger System Yes

Option for additional trainsets Yes Option for extended IT support No (High) Option for scale models Yes Option for additional saloon cameras Yes


WE ALSO CONSIDERED THE BOMBARDIER PROPOSAL SUBJECTIVELY IN THE LIGHT OF RECENT PROCUREMENT RESULTS FOR SIMILAR VEHICLES (TEST 5)

• The most obvious recent example for comparison is the contract just awarded to

Bombardier for CTA in Chicago - 406 cars at a reported $1.81m per car on average

− Factors which reduce the price in this case include high quantity (options for a further 300, and potential for more), simpler, shorter car than the NST, and absence of taxes

− However, this price is still very low by current standards, suggesting that Bombardier’s approach was driven by the competitive situation rather than cost

• Another relevant example is Bombardier’s recent winning bid for the Miami rapid transit car overhaul, which equates to $2.53m per car

− Interesting factors in this case are that, while this is an overhaul, all except carshell and truck frames are to be replaced with new, so this is close to a new car in scope

− In this case the price appears high, but was the lowest of 3 bids received, suggesting that risk was a major consideration for the bidders

• Another price that has been mentioned, although this is not yet a contract, and is under protest, is Montreal, where Bombardier’s published estimate equates to $2.98m per car

• The detailed and onerous TTC requirements force Bombardier to assume considerable technical, and eventually commercial, risk, which will increase the price for the NST.

AS THE NST PRICE FALLS IN THE MIDDLE OF THE RANGE OF PRICE DATA FROM VERY RECENT PROCUREMENTS, WE CONCLUDE THAT THE NST PRICE IS REASONABLE USING THIS VERY SUBJECTIVE APPROACH




THE RESULTS OF THE FIVE TESTS INDICATE THAT THE BOMBARDIER PRICE PROPOSAL IS REASONABLE

Test Result

1a NST basis price vs. results from Comparative Price model Pass

1b NST basis price vs. results from Component Price model Pass

2a Total proposal price vs. TERM model Pass

2b Total proposal price vs. escalated T1 price Pass

3a, b Verification for balance/ proportionality Pass

4 Review of NST extras and options against industry typical values Pass

5 Subjective comparison to some recent competitive procurements Pass


VI. COMMENTARY ON COST DRIVERS


Commentary on Cost Drivers…

BOOZ ALLEN WAS ALSO ASKED TO IDENTIFY ANY UNUSUAL COMMERCIAL OR TECHNICAL COST DRIVERS IN THE TTC RFP DOCUMENTS

• With the time constraint, this was not an in-depth review

• We did, however, perform a high level review of both aspects of the procurement documents against industry standards

• We reviewed the front end documents against the typical approach to vehicle procurements in the United States

• We also considered Bombardier’s listed exceptions to the Terms and Conditions in the review of the front end documents

• We considered the Technical Specification for factors which are unusual in the North American market, and which may result in increased prices

• Cost drivers which we understand to be pre-requisites for TTC were not reported, for example the wide inter-car gangways, and emergency detrainment ramps.



WE FOUND SOME COMMERCIAL REQUIREMENTS WHICH ARE UNUSUAL AND WHICH WILL AFFECT PRICING, ALTHOUGH MOSTLY IN A POSITIVE WAY FOR TTC

• Bonding – the Letter of Credit approach is quite favourable to carbuilders compared to usual

requirements

− This should result in a reduction in Bombardier’s costs, and hence a lower price. − Bonding availability and cost should be reviewed by industry risk experts to confirm the

supplier’s statements, cost and reasonableness • Escalation – Bombardier has proposed escalating all milestone payments from current year

dollars − This should result in lower risk to Bombardier and hence a lower price − With the escalation formula TTC’s may increase or decrease. The final cost of the

NST will not be known until the program is completed • We note Bombardier’s “Clause by Clause Compliance Statement” response to the commercial

requirements, which identifies many areas where the carbuilder is pushing back to reduce risk – we understand that this list is still under negotiation

• The milestone payment structure is quite heavily front end loaded - while this positively impacts price due to reduced carbuilder financing requirements, it does increase the risk to TTC

• The requirement to assess sales taxes on the price is quite unusual, and significantly increases the overall price – however we recognize that this is outside of TTC’s control



THE TECHNICAL REQUIREMENTS ARE VERY DETAILED BY INDUSTRY STANDARDS WHICH AFFECTS CARBUILDER RISK – A MAJOR RISK AREA FOR THE SUPPLIER WILL BE THE RELIABILITY AND AVAILABILITY REQUIREMENTS

• The NST appears to be highly specified as indicated by the 885 pages of technical specification alone

− A car builder will see considerable systems integration risk while being constrained by the detailed subsystem requirements, yet having to meet very demanding performance

• The reliability requirement of 480,000 miles between failures, with availability of 96.5% will be very difficult to achieve with such a complex train

− This is a high risk area for the supplier, resulting in extended warranty and support costs

− This requirement will lead to an increase in equipment to provide redundancy to avoid triggering failure measure

− The carbuilder will perceive risk to cash flow from failure to achieve performance targets

• This level of reliability and availability is unprecedented outside of Asian systems, which have some unique features absent in Toronto

− New trains were introduced into a system which was of much more modern design

− Strong operating discipline was established from Day 1 to contain the impact of failures

− Rigorous maintenance regimes were implemented to address impending failures

− There is a culture and approach of zero tolerance to failures

− These attributes are not typically found on North American systems!



SOME OTHER TECHNICAL REQUIREMENTS ARE COST DRIVERS EITHER DUE TO INCREASED RISK OR ADDITIONAL COMPLEXITY

• The requirements of Section 10 (TIMS) are a major risk area for the supplier

− The specified TIMS is onerous in magnitude and complexity, and will require significant systems integration effort and co-ordination with subsuppliers

• The antimicrobial coating on grabrails appears unnecessary and is likely to have limited life, increasing both initial cost as well as maintenance costs if it is to be maintained

• The provision of hopper windows with remotely controlled releases at each window increases costs – the combination of emergency ventilation and a smaller number of hopper windows should suffice

• Liquidated damages for failing to meet energy consumption goals will be considered high risk by the builder and the price will be adjusted accordingly, particularly with the challenging weight target for the NST

• Cab bodyside doors add cost due to the additional components, and also complicate the crashworthiness design of the carshell

• The requirement for structural fatigue loads at 108 cycles is higher than industry standards, and may result in additional cost

• The requirement for bonded glazing where possible is counter to the high availability requirement, due to curing time for replacement glazing – this could be seen as a risk



SOME OF THE SUPPORT REQUIREMENTS ARE ALSO COST DRIVERS

• The attendance requirement with a technical support response requirement of 10 minutes

is extreme, requiring a very high level of carbuilder staffing

• The requirement for extensive full scale car and cab mockups and detailed model trains adds unnecessary cost

• Combining the separate requirements for full scale cab mockups into the cab simulator could reduce costs

• The cost of training could be reduced by an approach of training the Trainers. The new TTC Trainers would then train the rest of the TTC personnel as required.

• Performing dynamic tests at the contractors plant rather than the TTC mainline

− The unusual rail gauge forces the contractor to heavily modify an existing or build a new test track

• The management, systems assurance and software management sections require significant overhead in terms of plans and submittals, for example the blast analysis could become quite costly to perform

• The IT support service requirement is something outside of normal carbuilder scope and would likely be subcontracted, adding costs

• Vehicle sway and bogie rotation (X factor) testing are requirements which are becoming obsolete with the improved accuracy of vehicle dynamic modeling techniques

• The Addendum 02 requirement for soft copies of all standards may be a cost driver due to licensing/ copyright costs.


THE SOLE-SOURCE APPROACH ADOPTED FOR THIS PROCUREMENT IS UNUSUAL, COMPARED TO THE NORMAL COMPETITIVE SITUATION, WHICH FORCES CARBUILDERS TO PLACE MORE EMPHASIS ON PRICING STRATEGY THAN COST

• Where a procurement is competed, the range of prices received can be wide, indicating that cost is often not the primary factor in pricing decisions

− For one procurement, with a winning bid of $3.1m per car, there was a lower bid of $2.67m, and the highest bid was $3.67m, a total range of $1m

− For another, the losing bid was more than 50% higher than the winning one, a range of $0.84m

• Factors which can significantly increase price, which are not directly related to cost, include

− Perceived risk – technical or commercial risk perception can drive prices up − Market conditions and competitive situations – carbuilders seeking to enter a market or

build market share will cut profit margins to a bare minimum, or may even take a loss − Exchange rate fluctuations form a major part of any vehicle pricing exercise, as

builders attempt to hedge against rate fluctuations – as up to 21%* of the value of the NST will be procured outside Canada, this could be a factor

* - 15% from US, 6% from Europe, per Form 00425 from Bombardier proposal for base suppliers

HOWEVER, AS TTC APPEARS TO ALREADY HAVE A REASONABLE PRICE, OPENING THE PROCUREMENT TO COMPETITION WOULD ADD SIGNIFICANT DELAY AND PROCUREMENT COST, WITH NO CERTAINTY OF ACHIEVING A SIGNIFICANT PRICE REDUCTION



VII. SUMMARY AND CONCLUSIONS


Summary and Conclusions…

THE PRICES PROPOSED BY BOMBARDIER FOR THE NST TRAINS AND COMMONLY INCLUDED ITEMS PASS OUR REASONABLENESS TESTS DEVELOPED FOR THIS PROJECT

• The price is higher than the average results using worldwide data

• The price is within the ranges for the average results when only North American data is considered

• The overall pricing is below that predicted by a model based upon US Federally Funded vehicle procurements

• The price is lower than the escalated price of the T1 car.



THE PROPOSAL APPEARS TO BE WELL BALANCED, AND OTHER INCLUDED LINE ITEMS AND OPTIONS ARE WITHIN REASONABLE LIMITS

• The pricing for spares and STTE are within normal ranges

• Other line items such as simulator, profile measurement and YMSS appear reasonable

• The pricing for the various options is also in line with industry standards

• We did not consider the prices for the contractor’s test track or computer based training due to insufficient information

SUBJECTIVELY THE PRICE FALLS WITHIN THE RANGE EXPECTED, WITH RECENT REPORTED PROCUREMENT PRICES BEING BOTH HIGHER AND LOWER



OUR EVALUATION DID IDENTIFY SOME COST DRIVERS WHICH MAY MERIT FURTHER NEGOTIATION WITH BOMBARDIER, AS WELL AS SOME WHICH BENEFIT TTC

• The reliability and availability requirements are very high, which add risks for the carbuilder, and thus increases the price

• The Train Information Management System is highly specified, and will pose a significant integration challenge for the carbuilder, increasing risk and thus price

• The overall high level of detail in the specification constrains the carbuilder, and increases his integration risk, and, by extension, price

• The management and systems assurance sections require significant carbuilder overhead for plans and submittals

• There are some other smaller items which increase price

− Anti-microbial coating − Hopper windows with remote release at all windows − Cab side access doors − Large number of mock-ups and models

• On the credit side, the bonding approach and front loaded milestones reduce the financing impact on the builder, which would otherwise be passed on to TTC.



ALTHOUGH USING A SOLE SOURCE APPROACH, THE TTC APPEARS TO HAVE A REASONABLE PRICE – A COMPETITIVE PROCUREMENT WOULD ADD SIGNIFICANT DELAY AND COST, WITH NO CERTAINTY OF SIGNIFICANT PRICE REDUCTION

• A sole source procurement of a new type of vehicle (as opposed to a follow on order) is unusual by general North American practice, although it is common in Canada

• However, in this case, our analysis has shown that the price proposed by Bombardier for the NST is fair and reasonable by industry standards

• Reissuing the RFP as a competitive solicitation would delay the NST program by up to a year

• A “re-compete” would cause TTC (and the builders competing) significant additional costs, and, most importantly

• There would be no guarantee that the revised price would even offset the additional procurement costs

− Bombardier’s overall price is already in the public domain, so all firms bidding will start with that as a target

− The high level of technical risk in the RFP may cause other firms to increase their prices above those proposed by Bombardier.


GLOSSARY


GLOSSARY OF TERMS AND ACRONYMS

CAD Canadian Dollars CBT Computer Based Training Comparative Cost Model

This model collates complete vehicle prices from a range of equivalent subway vehicle purchases worldwide, averaged to a per vehicle basis and normalized to the complexity level of the NST

Component Cost Model

This model projects a total vehicle price from a database of individual subsystem and contract line item costs, combined to predict average and high/low combinations

CPI Consumer Price Index CTA Chicago Transit Authority FTA (US) Federal Transit Administration HVAC Heating, Ventilation and Air Conditioning LRV Light Rail Vehicle MBTA Massachusetts Bay Transportation Authority NST New Subway Trains NST Basis Price for NST cars and commonly quoted contract line items such as spares and

training NST Extras Prices for line items unique to the NST procurement NST Total Price for NST Basis plus NST extras NYCT New York City Transit OECD Organisation for Economic Co-operation and Development PPI Producer Price Index RFP Request for Proposals STTE Special Tools and Test Equipment T1 Most recently procured TTC subway cars


TERM Transit Economic Requirements Model - uses data collected for the United states FTA

for heavy rail construction projects which receive federal funds TIMS Train Information Management System TTC Toronto Transit Commission YMSS Yard Maintenance Support System


APPENDICES


LIST OF APPENDICES

1 – Escalation factors

2 – Exchange Rates

3 – Comparative price model data table

4-11 – Comparative Price Model detailed results plots

12 – Component Price Model Input data

13 – Component Price Model Results

14 – Component Price Model Results for Proportionality

15 – Input data for FTA TERM model

16 – Escalation applied to 1992 T1 car purchase

17 – NST basis price derivation

18 – NST total price, without taxes, derivation

19 – NST extra price derivation

20 – Simulator prices

21 – Analysis of Price Breakdown for Consultants

APPENDIX 1 –ESCALATION FACTORS

Year Source 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999USA, PPI data for RR rolling stock manufacturing, Steet, subway, trolley & RT cars

US Dept of Labor, Bureau of Labor Stats 1.293 1.237 1.205 1.171 1.154 1.101 1.062 1.054 1.061 1.062 1.056

Canada - PPI to 2004, then Core Consumer Price Index

Organisation for Economic Co-operation and Development to 2004 then Bank of Canada 1.337 1.333 1.347 1.340 1.295 1.223 1.141 1.136 1.128 1.124 1.105

France - PPI Organisation for Economic Co-operation and Development 1.088 1.096 1.109 1.120 1.143 1.130 1.080 1.107 1.114 1.123 1.140

Germany - PPI Organisation for Economic Co-operation and Development 1.259 1.242 1.217 1.199 1.199 1.191 1.168 1.167 1.160 1.162 1.165

Italy - PPI Organisation for Economic Co-operation and Development 1.576 1.517 1.471 1.445 1.396 1.349 1.258 1.237 1.222 1.221 1.224

Spain Organisation for Economic Co-operation and Development 1.483 1.453 1.433 1.415 1.385 1.332 1.258 1.238 1.227 1.234 1.227

Korea Organisation for Economic Co-operation and Development 1.488 1.454 1.399 1.374 1.353 1.333 1.271 1.243 1.203 1.052 1.087

Austria Organisation for Economic Co-operation and Development 1.251 1.219 1.209 1.212 1.216 1.202 1.198 1.198 1.194 1.199 1.209

Belgium Organisation for Economic Co-operation and Development 1.253 1.253 1.264 1.264 1.283 1.264 1.237 1.228 1.208 1.224 1.224

China Organisation for Economic Co-operation and Development 1.054 1.057 1.100 1.126

Czech Rep Organisation for Economic Co-operation and Development 1.842 1.688 1.546 1.471 1.361 1.300 1.244 1.192 1.191

Brazil Organisation for Economic Co-operation and Development 132209 26825 2481 115 5.017 3.234 3.054 2.839 2.749 2.386

Japan Organisation for Economic Co-operation and Development 0.957 0.943 0.934 0.942 0.957 0.973 0.979 0.995 0.989 1.002 1.016

Mexico Organisation for Economic Co-operation and Development 7.603 6.212 5.233 4.681 4.399 4.142 2.957 2.226 1.934 1.711 1.493

Poland Organisation for Economic Co-operation and Development 1.641 1.485 1.373 1.294 1.234

Portugal Organisation for Economic Co-operation and Development 1.715 1.586 1.554 1.552 1.523 1.479 1.413 1.340 1.304 1.363 1.319

Sweden Organisation for Economic Co-operation and Development 1.395 1.341 1.321 1.335 1.271 1.219 1.118 1.142 1.133 1.138 1.143

UK Organisation for Economic Co-operation and Development 1.496 1.413 1.346 1.308 1.262 1.233 1.189 1.161 1.152 1.152 1.148


Year Source 2000 2001 2002 2003 2004 2005 2006 esc 04-06 esc 05-06USA, PPI data for RR rolling stock manufacturing, Steet, subway, trolley & RT cars

US Dept of Labor, Bureau of Labor Stats 1.051 1.048 1.051 1.058 1.048 1.019 1.000

Canada - PPI to 2004, then Core Consumer Price Index

Organisation for Economic Co-operation and Development to 2004 then Bank of Canada 1.061 1.051 1.051 1.065 1.033 1.017 1.000 0.033 0.017 Bank of Canada last two cells

France - PPI Organisation for Economic Co-operation and Development 1.119 1.107 1.109 1.106 1.094 1.058 1.000 0.094 0.058 European central bank last two cells

Germany - PPI Organisation for Economic Co-operation and Development 1.133 1.120 1.117 1.111 1.094 1.058 1.000 0.094 0.058 European central bank last two cells

Italy - PPI Organisation for Economic Co-operation and Development 1.159 1.139 1.138 1.121 1.094 1.058 1.000 0.094 0.058 European central bank last two cells

Spain Organisation for Economic Co-operation and Development 1.168 1.150 1.143 1.128 1.094 1.058 1.000 0.094 0.058 European central bank last two cells

Korea Organisation for Economic Co-operation and Development 1.062 1.084 1.101 1.082 1.007 1.047 1.000 0.007 0.047 Korea National Statistical Office last two c

Austria Organisation for Economic Co-operation and Development 1.172 1.157 1.160 1.143 1.094 1.058 1.000 0.094 0.058 European central bank last two cells

Belgium Organisation for Economic Co-operation and Development 1.123 1.128 1.131 1.136 1.094 1.058 1.000 0.094 0.058 European central bank last two cells

China Organisation for Economic Co-operation and Development 1.097 1.111 1.136 1.111 1.050 1.025 1.000 0.050 0.025 Extrapolation

Czech Rep Organisation for Economic Co-operation and Development 1.130 1.103 1.117 1.119 1.060 1.030 1.000 0.060 0.030 Extrapolation

Brazil Organisation for Economic Co-operation and Development 2.051 1.844 1.609 1.305 1.200 1.100 1.000 0.200 0.100 Extrapolation

Japan Organisation for Economic Co-operation and Development 1.015 1.038 1.059 1.067 1.056 1.048 1.000 0.056 0.048 Bank of Japan last two cells

Mexico Organisation for Economic Co-operation and Development 1.367 1.326 1.275 1.193 1.100 1.050 1.000 0.100 0.050 Extrapolation

Poland Organisation for Economic Co-operation and Development 1.151 1.153 1.152 1.127 1.060 1.030 1.000 0.060 0.030 Extrapolation

Portugal Organisation for Economic Co-operation and Development 1.159 1.132 1.127 1.123 1.094 1.058 1.000 0.094 0.058 European central bank last two cells

Sweden Organisation for Economic Co-operation and Development 1.101 1.086 1.091 1.103 1.094 1.058 1.000 0.094 0.058 European central bank last two cells

UK Organisation for Economic Co-operation and Development 1.132 1.135 1.134 1.119 1.094 1.058 1.000 0.094 0.058 European central bank last two cells


APPENDIX 2 –EXCHANGE RATE FACTORS

Units per CADCurrency Unit 2006 2005 2004 2003 2002 2001 2000 1999 1998ATS Austria Schillings (Obsolete) 9.782641 9.083941 8.55727 8.607086 9.369193 9.973185 9.8744 8.511399 8.559307BEF Belgium Francs (Obsolete) 28.67894 26.63062 25.08662 25.23266 27.46687 29.23754 28.94794 24.96777 25.09406CNY China Yuan Renminbi 6.987826 6.82761 6.371227 5.765691 5.260638 5.365013 5.630057 5.504477 5.662564CZK Czech Republic Koruny 20.39746 19.75922 19.97975 19.88028 20.79748 24.88896 25.6817 22.53331 22.56612DKK Denmark Kroner 5.305979 4.908199 4.628497 4.647 5.052604 5.403716 5.342804 4.604945 4.632975EUR Euro 0.710932 0.660156 0.621881 0.625501 0.680886 0.72478 0.717601 0.619189 0.614347FRF France Francs (Obsolete) 4.66341 4.330338 4.079272 4.10302 4.466318 4.754243 4.707151 4.059709 4.076778DEM Germany Deutsche Marks (Obs 1.390463 1.291152 1.216294 1.223374 1.331697 1.417546 1.403505 1.209542 1.216607HKD Hong Kong Dollars 6.756271 6.450807 5.993322 5.442321 4.956047 5.060147 5.297462 5.195951 5.299757ITL Italy Lire (Obsolete) 1376.557 1278.24 1204.13 1211.139 1318.379 1403.369 1389.469 1197.601 1199.178JPY Japan Yen 101.6181 90.32046 82.68058 81.56513 80.58665 78.70278 71.12973 76.97484 91.97477ESP Spain Pesetas (Obsolete) 118.2892 109.8407 103.4723 104.0747 113.2899 120.5932 119.3987 103.0469 103.2242SEK Sweden Kronor 6.650381 6.096615 5.669391 5.727653 6.209432 6.686294 6.05571 5.524622 5.435557CHF Switzerland Francs 1.11406 1.023807 0.962079 0.941636 0.997962 1.097296 1.126128 0.99069 1.005417TWD Taiwan New Dollars 28.33424 26.54108 25.85656 23.98763 21.95753 21.83486 21.04652 21.60745 22.87589GBP United Kingdom Pounds 0.492289 0.453251 0.424506 0.429115 0.424252 0.447344 0.440038 0.414272 0.409188USD United States Dollars 0.870536 0.829715 0.769663 0.69927 0.635444 0.648756 0.680274 0.669942 0.683971

Currency Unit 1997 1996 1995 1994 1993 1992 1991 1990 1989ATS Austria Schillings (Obsolete) 8.579504 7.721779 7.362144BEF Belgium Francs (Obsolete) 25.14816 22.57287 21.37666CNY China Yuan Renminbi 6.009688 6.12003 6.131208CZK Czech Republic Koruny 21.98418 19.80198 0DKK Denmark Kroner 4.646578 4.232726 4.029009EUR Euro 0.624626 0.585605 0.566091FRF France Francs (Obsolete) 4.105292 3.729655 3.588088DEM Germany Deutsche Marks (Obs 1.219231 1.097663 1.040042 1.2943HKD Hong Kong Dollars 5.610136 5.689932 5.704507ITL Italy Lire (Obsolete) 1199.181 1139.902 1173.709JPY Japan Yen 85.82668 79.61909 75.35795ESP Spain Pesetas (Obsolete) 102.9945 92.40034 89.12656SEK Sweden Kronor 5.39594 4.893044 5.203CHF Switzerland Francs 1.033778 0.892936 0.842318TWD Taiwan New Dollars 20.17056 20.05054 19.96008GBP United Kingdom Pounds 0.438287 0.474342 0.474024USD United States Dollars 0.724672 0.735705 0.737626 0.7324 0.7758 0.8285 0.87288 0.85738 0.84472

http://www.oanda.com/convert/fxhistory


APPENDIX 3 – COMPARATIVE PRICE MODEL DATA TABLE

Country City/Agency Vehicle Builder Main build country

Builders Home Country

Class Code Base Quantity

Year of Order

Train Consist

Carbody material Cost Drivers/ Unusual features

Normalization factor relative to

TTC - equivalence to

TTC cars

Notes Source

Algeria Algiers Metro CAF Spain Spain New 84 2006 Euro 1.52 1.37 6 10 year maintenance option 1.11 Siemens has prime contract for metro. The contract includes options on mPress releaseArgentina Buenos Aires Alstom France/ Brazil France Line A New 80 1999 Euro 1.61 1.45 5 St. steel 1.11 Press releaseAustria Vienna Siemens Austria Germany Mo.Mo New 150 2002 Euro 1.28 1.28 6 Wide gangways 1.00 Press releaseBelgium Brussels Bombardier Belgium Canada New 25 1997 C$ 3.20 3.20 1.00 Alstom/Bombardier jv Press releaseBelgium Brussels/STIB CAF Spain Spain New 96 2004 Euro 1.26 1.26 6 Aluminum Maintenance contract option included 1.00 The contract includes options on maintenance and additional cars. IRJ Feb 2004Canada Toronto TTC Bombardier Canada Canada T1 Sole source 216 1992 US$ 1.78 1.78 2 Aluminum Track gauge 1.00 Press releaseCanada Toronto TTC Bombardier Canada Canada T1 Follow on 156 1998 C$ 1.97 1.97 2 Aluminum Track gauge 1.00 Option in 1992 order. 13t a/c unit Press releaseCanada Vancouver Bombardier Canada Canada Skytrain ART I New 20 1989 US$ 2.06 1.86 2 LIM 1.11 Press releaseCanada Vancouver Bombardier Canada Canada Skytrain ART II New 60 1998 C$ 3.05 2.75 2 LIM 1.11 Option cars at 1.45mUS Press releaseCanada Vancouver Rotem Korea Korea New 40 2005 C$ 2.22 2.00 2 Automated 1.11 RTOL 12/05Chile Santiago Alstom France/ Brazil France New 42 1997 US$ 1.32 1.45 Rubber tired 0.91 Press releaseChile Santiago Alstom France/ Brazil France Follow on 92 2000 Euro 1.55 1.41 8, 7 Rubber tired, 2yr maintenance 0.91 Rubber tyre - follow in to 1997 order. 10 x 8 car, 1 x 7 car and 5 trailers fo Press releaseChile Santiago Alstom France/ Brazil France Metropolis, Line 4 New 180 2002 Euro 1.26 1.39 3 St. steel ATC and maintenance 0.91 Press releaseChile Santiago Alstom France/ Brazil France New 85 2005 Euro 1.07 1.13 2 year maintenance 0.95 2 contracts - 42 with option for 43 exercised at same time 2 year supervisi Press releaseChina Guangzhou Adtranz/ Changchun Car China Germany Line 2 (Movia) New 156 2000 US$ 1.32 1.19 6 Aluminum 1500V dc 1.11 All but first 2 trains assembled locally Press releaseChina Guangzhou Bombardier/ Changchun Car China Canada Movia New 48 2004 US$ 1.64 1.48 6 Aluminum 1500V dc 1.11 Press releaseChina Hong Kong KCRC Mitsubishi/ Hyundai Japan Japan New 104 1998 US$ 1.14 1.14 8 1.00 RGI 1/99China Hong Kong KCRC Itochu/ Kinkisharyo/ Kawasaki Japan Japan Westrail New 250 1999 HK$ 12.40 12.40 7 1.00 For Westrail project RGI 4/99China Nanjing Alstom China France Metropolis New 120 2002 Euro 1.48 1.33 6 1.11 Local assembly after first train Press releaseChina Shanghai Alstom China France Metropolis, Line 3 New 168 1999 Euro 1.34 1.21 6 Aluminum 1.11 Press releaseChina Shanghai Alstom China France Metropolis New 152 2000 Euro 1.14 1.03 4 1.11 Press releaseChina Shanghai Siemens China Germany Line 4 New 228 2002 US$ 1.31 1.18 6 1.11 High local content. 28 x 6 for line 4, 10 x 6 option for Line 1 "granted" Press releaseChina Shanghai Bombardier/ Changchun Car China Canada Line 1 New 60 2002 C$ 2.24 2.02 6 aluminum 1.11 Press releaseChina Shenzhen Bombardier/ Changchun Car China Canada New 114 2001 C$ 2.16 1.95 6 aluminum 1.11 For Phase 1 line. 18 trains to be built in China Press releaseChina Guangzhou Siemens and ZELW China Germany New 120 2003 Euro 1.57 1.42 3 1.11 Press releaseChina Shanghai Alstom China France Metropolis Follow on 168 2003 Euro 0.99 1.10 6 1.11 Follow on order Press releaseChina Shanghai Alstom China France New 128 2004 Euro 1.16 1.05 8 Aluminium 1500V dc 1.11 Press releaseChina Shanghai Alstom China France Metropolis New 96 2006 Euro 1.16 1.04 8 1.11 Press releaseCzech Republic Prague (DPHMP) CKD/ Siemens/ Adtranz Czech Republic Germany M1 New 110 1995 KC 40.67 36.64 5 1.11 RGI 9/98Czech Republic Prague (DPHMP) Siemens Czech Republic Germany M1 Follow on 100 2002 Euro 0.90 1.00 5 1.11 Follow on order Press releaseDominican Rep. Santo Domingo Alstom Spain France Metropolis New 57 2006 Euro 1.80 1.62 3 1.11 Press releaseEgypt Cairo Mitsubishi Japan Japan Line 1 Follow on 42 2001 US$ 1.40 1.55 6 1.11 Follow on order - 7 trainsets, assume 6 car RGI 3/01France Paris (RATP) Alstom/ Bombardier France France MF 2000 New 805 2001 Euro 0.96 0.86 T-3M-T steel wide gangway 1.11 Steel wheel. Full width gangways. Bom share $300m for 1610 trucks, 805IRJ 7/01, Press Release 7/01France Paris (RATP) Alstom France France MP05 New 294 2005 Euro 1.79 1.61 DT-4M-DT Rubber tired, wide gangway 1.11 Through gangway, with an option of 10 additional metro trainsets, and the Press releaseFrance Paris (RATP) Alstom/ Bombardier France France MF2000 Option order 225 2006 Euro 0.78 0.86 T-3M-T steel wide gangway 1.11 Option exercised on prior order Press releaseGermany Berlin Adtranz Germany Germany H New 144 1992 DM 2.33 2.33 6 1.00 Original order quantity reduced from 690 cars MR, 1/99, RGI 4/99Germany Hamburg Bombardier/Alstom LHB Germany Canada DT4.6 Follow on 60 2002 Euro 1.00 1.00 4 1.00 Follow on order Press releaseGermany Hamburg HHA Alstom/ Adtranz Germany France DT4.5 Follow on 100 2001 DM 1.50 1.88 2 artic pairs Artic 1.25 Follow on order - 5th series since 1986. 86x4 delivered to date Press releaseGermany Munich Bombardier/ Siemens Germany Canada Type C Follow on 48 2003 Euro 1.46 1.46 6 1.00 Follow on order.115 meters long, 2.9 meters wide Press releaseGreece Athens/ATTIKO Metro Rotem Korea Korea New 126 2002 Euro 1.58 1.58 6 1.00 IRJ 9/02Holland Rotterdam (RET) Bombardier Belgium Canada New 36 1996 C$ 2.44 2.44 2 1.00 Press releaseHungary Budapest Alstom/ Ganz Hungary France Metropolis New 170 2006 Euro 1.38 1.45 4, 5 car 3 year maintenance 0.95 Includes maintenance of these vehicles for a three-year period Press releaseItaly Rome (ATAC) CAF Spain Spain Line A New 198 2001 Euro 1.11 1.17 4M-2T Aluminum 1500V dc, option for 5 yr maintenance 0.95 Similar to Madrid cars. Option for 5 yr maintenance Press releaseItaly Turin (SATTI) Siemens Austria Germany VAL 208 New 184 2001 Euro 1.58 1.74 4 Rubber tired, driverless 0.91 Rubber tired.Driverless Press releaseMexico Mexico City Bombardier Canada Canada FM 95A New 78 1991 US$ 1.37 1.50 MC-T-M Steel Rubber tired 0.91 cab ac Press releaseMexico Mexico City (STC) Bombardier/ CAF Mexico/ Spain Canada Line 2 New 405 2002 C$ 1.71 1.88 9 Rubber tired 0.91 Bom scope 28 trains plus all trucks. CAF scope is 17 trains plus "running Press releasePoland Warsaw Alstom Poland France Metropolis New 108 1998 US$ 1.29 1.29 6 1.00 Was protested Press releasePortugal Lisbon Adtranz/ Siemens Portugal Germany M95 Follow on 114 1999 Euro 1.14 1.14 3 1.00 Follow on order. Total value of base + 1997 option plus this option is ECUPress releasePuerto Rico San Juan (Tren Urbano) Siemens Austria/ US Germany New 74 1998 US$ 2.02 2.02 2 1.00 Car only $1.89 Press releaseRomania Bucharest Adtranz Germany Germany Movia New 108 1999 US$ 1.02 1.02 6 1.00 Movia platform, derived from Stockholm C20. Supplied in kit form for loca RGI, 7/99Romania Bucharest Bombardier Germany Canada Movia Follow on 120 2005 US$ 1.20 1.20 1.00 Follow on order Press releaseSingapore MRT Alstom France France NEL New 150 1998 US$ 1.27 1.40 T-4M-T 1500V dc, 30 yr maintenance, driverless 0.91 Includes 30 yr mtce. Driverless MT 7/98 and BAH, RGI 12/00Singapore MRT Kawasaki Japan Japan Changi New 126 1998 US$ 1.18 1.18 6 Driverless 1.00 Driverless BAHSouth Korea Seoul Hanjin Heavy Ind Korea Korea New 402 1996 US$ 1.80 1.80 St. steel 1.00 BAHSpain Barcelona Alstom Spain France Metropolis, Line 9 New 250 2002 Euro 1.16 1.16 5 Driverless 1.00 Driverless. AnsaldoBreda providing trucks and aux. Converters Press releaseSpain Barcelona CAF Spain Spain 5000 series New 165 2002 Euro 1.05 1.05 1.00 Press releaseSpain Barcelona CAF Spain Spain Series 6000 New 50 2005 Euro 1.30 1.30 5 1.00 Press releaseSpain Bilbao CAF/ Adtranz Spain Spain Line 2 New 148 1999 Pta 250.00 250.00 4 1.00 Price for original 40 cars RGI 4/99Spain Madrid Metro CAF/ Alstom Spain Spain 6000 New 74 1997 Pta 230.00 230.00 2 ATO 1.00 25 CAF built, rest Alstom. ATO RGI 12/98, 5/99Spain Madrid Metro AnsaldoBreda Italy Italy Series 9000 New 252 2004 Euro 1.19 1.19 6, 3 Dual voltage 1.00 Options on at least 237 more vehicles�26 car trains - single voltage@1500 Press releaseSpain Valencia Alstom Spain France New 40 2004 Euro 1.50 1.50 4 1.00 Press releaseSweden Stockholm (SL) Adtranz Sweden Germany C20/ Vagn 2000 new 450 1995 US$ 1.26 1.01 3 artic artic 1.25 3 section artic. Includes option of 225 exercised in 1998 RGI 7/98Sweden Stockholm (SL) Bombardier Sweden Canada C20/ Vagn 2000 Follow on 210 2001 C$ 1.02 1.28 3 artic artic 1.25 Length for unit. Follow on order Press releaseTaiwan Taipei Kawasaki Japan Japan New 321 2003 NT 47.35 47.35 1.00 RGI Oct 2003Taiwan Taipei TRTC Siemens Austria Germany Follow on 36 2001 Euro 1.83 1.83 6 1.00 Plans to order another 24 in 2002. Identical to 216 already in service RGI 10/01Turkey Istanbul Alstom France France New 32 1997 Euro 1.45 1.31 1.11 Similar to Caracas. Also support for local assembly of 62 more Press releaseUK London Underground Bombardier UK UK Victoria Line New 376 2003 GBP 1.11 1.00 8 1.11 Part of much larger contract/ order Press release, BAH est. for costUSA Atlanta (MARTA) Breda Italy/ USA Italy CQ 312 Car only 100 1998 US$ 1.88 1.88 St. steel 1.00 Car price only Internal dataUSA Boston (MBTA) Bombardier Canada Canada No. 3 Red New 86 1990 US$ 1.71 1.54 M-T St. steel 1.11 $1.487m for cars only Press releaseUSA Boston (MBTA) Siemens/ Talgo TTA USA Germany No. 5 Blue Line New 94 2001 US$ 1.81 1.81 2 St. steel 1.00 RGI 10/01, Press Release, 11/01USA Chicago Bombardier Canada Canada New 406 2006 US$ 1.58 1.42 1.11 206 rapid transit vehicles and exercised a first option for 200 additional vehPress releaseUSA Los Angeles MTA Breda Italy/ USA Italy Red Line New 30 1989 US$ 1.79 1.79 1.00 FTA TERM databaseUSA Los Angeles MTA Breda Italy/ USA Italy Red Line Follow on 74 1994 US$ 1.93 1.93 1.00 AC drive - change from first order FTA TERM databaseUSA New York (NYCT) Bombardier USA Canada R142 Option order 680 1997 US$ 1.20 1.33 M-3MT-M St. steel 1.11 Option cars $1.17m Press ReleaseUSA New York (NYCT) Kawasaki USA Japan R142a New 400 1997 US$ 1.48 1.33 1.11 BAH internalUSA New York (NYCT) Kawasaki USA USA R143 New 212 1998 US$ 1.90 1.90 1.00 Option may have been exercised Press ReleaseUSA New York (NYCT) Bombardier USA Canada R142 New 350 2001 US$ 1.33 1.20 M-3MT-M St. steel 1.11 Used 200 car option in original and 150 new cars Press ReleaseUSA New York (NYCT) Kawasaki USA USA R142a Follow on 120 2001 US$ 1.02 1.13 M-3MT-M St. steel 1.11 Follow on order RTOL, 5/03USA New York (NYCT) Alstom/ Kawasaki Brazil/ USA USA R160 New 660 2002 US$ 1.62 1.46 M-3MT-M 1.11 60/40 split Als/Kaw - common design, based on R-143 and fully compatibl Press ReleaseUSA New York (NYCT) Kawasaki USA USA R142a Follow on 80 2003 US$ 1.13 1.25 M-3MT-M St. steel 1.11 Follow on order RTOL, 3/01USA New York (PATH) Kawasaki USA USA PA-5 New 340 2005 US$ 1.63 1.47 1.11 Press ReleaseUSA Philadelphia (SEPTA) Adtranz USA Germany M4 New 222 1993 US$ 1.34 1.34 1.00 FTA TERM database, date correcteUSA San Francisco (BART) MK USA USA C2 New 80 1992 US$ 1.95 1.95 M 1.00 BAHUSA Washington DC (WMATA) Breda Italy/ USA Italy 4000 New 100 1989 US$ 1.26 1.26 1.00 APTA dataUSA Washington DC (WMATA) AAI/CAF Spain/ USA Spain 5000 New 192 1998 US$ 1.77 1.77 1.00 Option exercised - now 192 CityRail5/98USA Washington DC (WMATA) Alstom USA USA 6000 New 182 2002 US$ 1.74 1.74 1.00 Includes option for 120 in 2004 Press Release

DATA NOT USED IN MAIN ANALYSIS

USA Boston (MBTA) Bombardier USA Canada No. 5 Blue Line Losing bid 94 2001 US$ 2.44 2.20 1.11 Acceptable technical proposal ConfidentialUSA Boston (MBTA) Kawasaki USA USA No. 5 Blue Line Losing bid 94 2001 US$ 2.64 2.38 1.11 Acceptable technical proposal ConfidentialUSA Boston (MBTA) Kinkisharyo USA Japan No. 5 Blue Line Losing bid 94 2001 US$ 1.92 1.73 1.11 Acceptable technical proposal ConfidentialCanada Montreal Bombardier Canada Canada Negotiation 366 2006 C$ 2.98 3.28 St. steel Rubber tired 0.91 RTOL 5/05USA Miami Bombardier USA Canada Rehab 136 2006 US$ 2.20 2.20 rehab 1.00 Rehab of all except structure and truck BAH internal sourceUSA Boston (MBTA) Bombardier Canada Canada No. 3 Red Car only 1990 US$ 1.49 1.49 M-T St. steel 1.00 ConfidentialUSA New York (NYCT) Alstom/ Kawasaki Brazil/ USA USA R160 4 car Car only 425 2002 US$ 1.32 1.32 M-2MT-M 1.00 Car price only ConfidentialUSA New York (NYCT) Alstom/ Kawasaki Brazil/ USA USA R160 5 car Car only 384 2002 US$ 1.31 1.31 M-3MT-M 1.00 Car price only Confidential

Base currency

Normalized Price, orig currency, base year

Price, orig currency, base year

Average Price Per Car


Country City/Agency Vehicle Builder Main build country

Builders Home Country

ClassAverage of all

escalation approaches

Esc. price, conv. to CAD, build

country

Esc. price, base currency, build

country

Esc. price, conv. to CAD, builder home country

Esc. price, base

currency, builder home

country

Esc. price, CAD basis,

build country

Esc. price, CAD basis, builder home country

Base Price, CAD, base

year

Base price, US$m, base

year

Algeria Algiers Metro CAF Spain Spain CAD 2.14 CAD 2.14 1.52 CAD 2.14 1.52 CAD 2.14 CAD 2.14 CAD 2.14 $1.88 Euro 1.52 1.37Argentina Buenos Aires Alstom France/ Brazil France Line A CAD 3.53 CAD 4.00 2.84 CAD 2.58 1.84 CAD 4.59 CAD 2.97 CAD 2.60 $1.72 Euro 1.61 1.45Austria Vienna Siemens Austria Germany Mo.Mo CAD 2.10 CAD 2.09 1.49 CAD 2.01 1.43 CAD 2.18 CAD 2.10 CAD 1.88 $1.21 Euro 1.28 1.28Belgium Brussels Bombardier Belgium Canada CAD 3.74 CAD 3.86 3.86 CAD 3.61 3.61 CAD 3.86 CAD 3.61 CAD 3.20 $2.31 C$ 3.20 3.20Belgium Brussels/STIB CAF Spain Spain CAD 2.08 CAD 1.94 1.38 CAD 1.94 1.38 CAD 2.22 CAD 2.22 CAD 2.03 $1.57 Euro 1.26 1.26Canada Toronto TTC Bombardier Canada Canada T1 CAD 2.81 CAD 2.74 2.39 CAD 2.74 2.39 CAD 2.88 CAD 2.88 CAD 2.15 $1.78 US$ 1.78 1.78Canada Toronto TTC Bombardier Canada Canada T1 CAD 2.21 CAD 2.21 2.21 CAD 2.21 2.21 CAD 2.21 CAD 2.21 CAD 1.97 $1.33 C$ 1.97 1.97Canada Vancouver Bombardier Canada Canada Skytrain ART I CAD 3.22 CAD 3.17 2.76 CAD 3.17 2.76 CAD 3.27 CAD 3.27 CAD 2.44 $2.06 US$ 2.06 1.86Canada Vancouver Bombardier Canada Canada Skytrain ART II CAD 3.43 CAD 3.43 3.43 CAD 3.43 3.43 CAD 3.43 CAD 3.43 CAD 3.05 $2.06 C$ 3.05 2.75Canada Vancouver Rotem Korea Korea CAD 2.32 CAD 2.32 2.32 CAD 2.32 2.32 CAD 2.32 CAD 2.32 CAD 2.22 $1.83 C$ 2.22 2.00Chile Santiago Alstom France/ Brazil France CAD 2.58 CAD 3.00 2.61 CAD 1.69 1.47 CAD 3.60 CAD 2.03 CAD 1.82 $1.32 US$ 1.32 1.45Chile Santiago Alstom France/ Brazil France CAD 2.93 CAD 3.45 2.46 CAD 2.44 1.73 CAD 3.42 CAD 2.42 CAD 2.16 $1.43 Euro 1.55 1.41Chile Santiago Alstom France/ Brazil France Metropolis, Line 4 CAD 2.24 CAD 2.42 1.72 CAD 1.97 1.40 CAD 2.52 CAD 2.06 CAD 1.86 $1.19 Euro 1.26 1.39Chile Santiago Alstom France/ Brazil France CAD 1.67 CAD 1.63 1.16 CAD 1.60 1.13 CAD 1.75 CAD 1.72 CAD 1.63 $1.33 Euro 1.07 1.13China Guangzhou Adtranz/ Changchun Car China Germany Line 2 (Movia) CAD 1.93 CAD 1.67 1.45 CAD 1.72 1.50 CAD 2.13 CAD 2.20 CAD 1.94 $1.32 US$ 1.32 1.19China Guangzhou Bombardier/ Changchun Car China Canada Movia CAD 2.09 CAD 1.98 1.72 CAD 1.95 1.70 CAD 2.24 CAD 2.20 CAD 2.13 $1.64 US$ 1.64 1.48China Hong Kong KCRC Mitsubishi/ Hyundai Japan Japan CAD 1.49 CAD 1.31 1.14 CAD 1.31 1.14 CAD 1.67 CAD 1.67 CAD 1.67 $1.14 US$ 1.14 1.14China Hong Kong KCRC Itochu/ Kinkisharyo/ Kawasaki Japan Japan Westrail CAD 2.14 CAD 1.86 12.60 CAD 1.86 12.60 CAD 2.42 CAD 2.42 CAD 2.39 $1.60 HK$ 12.40 12.40China Nanjing Alstom China France Metropolis CAD 2.38 CAD 2.36 1.68 CAD 2.30 1.64 CAD 2.46 CAD 2.40 CAD 2.17 $1.39 Euro 1.48 1.33China Shanghai Alstom China France Metropolis, Line 3 CAD 2.30 CAD 2.12 1.51 CAD 2.15 1.53 CAD 2.44 CAD 2.47 CAD 2.17 $1.43 Euro 1.34 1.21China Shanghai Alstom China France Metropolis CAD 1.77 CAD 1.76 1.25 CAD 1.80 1.28 CAD 1.75 CAD 1.78 CAD 1.59 $1.05 Euro 1.14 1.03China Shanghai Siemens China Germany Line 4 CAD 2.01 CAD 1.71 1.49 CAD 1.68 1.46 CAD 2.34 CAD 2.30 CAD 2.06 $1.31 US$ 1.31 1.18China Shanghai Bombardier/ Changchun Car China Canada Line 1 CAD 2.45 CAD 2.55 2.55 CAD 2.36 2.36 CAD 2.55 CAD 2.36 CAD 2.24 $1.43 C$ 2.24 2.02China Shenzhen Bombardier/ Changchun Car China Canada CAD 2.34 CAD 2.40 2.40 CAD 2.28 2.28 CAD 2.40 CAD 2.28 CAD 2.16 $1.40 C$ 2.16 1.95China Guangzhou Siemens and ZELW China Germany CAD 2.63 CAD 2.46 1.75 CAD 2.46 1.75 CAD 2.79 CAD 2.80 CAD 2.52 $1.78 Euro 1.57 1.42China Shanghai Alstom China France Metropolis CAD 1.64 CAD 1.54 1.09 CAD 1.54 1.09 CAD 1.75 CAD 1.75 CAD 1.58 $1.11 Euro 0.99 1.10China Shanghai Alstom China France CAD 1.88 CAD 1.72 1.22 CAD 1.79 1.27 CAD 1.96 CAD 2.05 CAD 1.87 $1.44 Euro 1.16 1.05China Shanghai Alstom China France Metropolis CAD 1.63 CAD 1.63 1.16 CAD 1.63 1.16 CAD 1.63 CAD 1.63 CAD 1.63 $1.43 Euro 1.16 1.04Czech Republic Prague (DPHMP) CKD/ Siemens/ Adtranz Czech Republic Germany M1 CAD 2.56 CAD 2.71 55.36 CAD 2.33 47.52 CAD 2.80 CAD 2.40 CAD 2.05 $1.54 KC 40.67 36.64Czech Republic Prague (DPHMP) Siemens Czech Republic Germany M1 CAD 1.45 CAD 1.41 1.01 CAD 1.41 1.01 CAD 1.48 CAD 1.48 CAD 1.32 $0.85 Euro 0.90 1.00Dominican Rep. Santo Domingo Alstom Spain France Metropolis CAD 2.53 CAD 2.53 1.80 CAD 2.53 1.80 CAD 2.53 CAD 2.53 CAD 2.53 $2.22 Euro 1.80 1.62Egypt Cairo Mitsubishi Japan Japan Line 1 CAD 1.95 CAD 1.66 1.45 CAD 1.66 1.45 CAD 2.23 CAD 2.23 CAD 2.15 $1.40 US$ 1.40 1.55France Paris (RATP) Alstom/ Bombardier France France MF 2000 CAD 1.48 CAD 1.49 1.06 CAD 1.49 1.06 CAD 1.46 CAD 1.46 CAD 1.32 $0.86 Euro 0.96 0.86France Paris (RATP) Alstom France France MP05 CAD 2.76 CAD 2.66 1.89 CAD 2.66 1.89 CAD 2.87 CAD 2.87 CAD 2.71 $2.22 Euro 1.79 1.61France Paris (RATP) Alstom/ Bombardier France France MF2000 CAD 1.09 CAD 1.09 0.78 CAD 1.09 0.78 CAD 1.09 CAD 1.09 CAD 1.09 $0.96 Euro 0.78 0.86Germany Berlin Adtranz Germany Germany H CAD 2.08 CAD 2.01 2.79 CAD 2.01 2.79 CAD 2.16 CAD 2.16 CAD 1.80 $1.49 DM 2.33 2.33Germany Hamburg Bombardier/Alstom LHB Germany Canada DT4.6 CAD 1.56 CAD 1.57 1.12 CAD 1.48 1.05 CAD 1.64 CAD 1.54 CAD 1.47 $0.94 Euro 1.00 1.00Germany Hamburg HHA Alstom/ Adtranz Germany France DT4.5 CAD 1.19 CAD 1.21 1.68 CAD 1.19 1.66 CAD 1.18 CAD 1.17 CAD 1.06 $0.69 DM 1.50 1.88Germany Munich Bombardier/ Siemens Germany Canada Type C CAD 2.38 CAD 2.28 1.62 CAD 2.18 1.55 CAD 2.59 CAD 2.48 CAD 2.33 $1.65 Euro 1.46 1.46Greece Athens/ATTIKO Metro Rotem Korea Korea CAD 2.50 CAD 2.45 1.74 CAD 2.45 1.74 CAD 2.55 CAD 2.55 CAD 2.32 $1.49 Euro 1.58 1.58Holland Rotterdam (RET) Bombardier Belgium Canada CAD 2.88 CAD 3.00 3.00 CAD 2.77 2.77 CAD 3.00 CAD 2.77 CAD 2.44 $1.79 C$ 2.44 2.44Hungary Budapest Alstom/ Ganz Hungary France Metropolis CAD 1.94 CAD 1.94 1.38 CAD 1.94 1.38 CAD 1.94 CAD 1.94 CAD 1.94 $1.70 Euro 1.38 1.45Italy Rome (ATAC) CAF Spain Spain Line A CAD 1.78 CAD 1.80 1.28 CAD 1.80 1.28 CAD 1.76 CAD 1.76 CAD 1.53 $1.00 Euro 1.11 1.17Italy Turin (SATTI) Siemens Austria Germany VAL 208 CAD 2.51 CAD 2.57 1.83 CAD 2.49 1.77 CAD 2.53 CAD 2.44 CAD 2.18 $1.42 Euro 1.58 1.74Mexico Mexico City Bombardier Canada Canada FM 95A CAD 2.11 CAD 2.11 1.84 CAD 2.11 1.84 CAD 2.11 CAD 2.11 CAD 1.56 $1.37 US$ 1.37 1.50Mexico Mexico City (STC) Bombardier/ CAF Mexico/ Spain Canada Line 2 CAD 1.93 CAD 2.07 2.07 CAD 1.80 1.80 CAD 2.07 CAD 1.80 CAD 1.71 $1.09 C$ 1.71 1.88Poland Warsaw Alstom Poland France Metropolis CAD 2.03 CAD 1.92 1.67 CAD 1.66 1.45 CAD 2.44 CAD 2.12 CAD 1.89 $1.29 US$ 1.29 1.29Portugal Lisbon Adtranz/ Siemens Portugal Germany M95 CAD 2.14 CAD 2.12 1.50 CAD 1.87 1.33 CAD 2.43 CAD 2.15 CAD 1.84 $1.21 Euro 1.14 1.14Puerto Rico San Juan (Tren Urbano) Siemens Austria/ US Germany CAD 3.02 CAD 2.62 2.28 CAD 2.70 2.35 CAD 3.34 CAD 3.43 CAD 2.95 $2.02 US$ 2.02 2.02Romania Bucharest Adtranz Germany Germany Movia CAD 1.57 CAD 1.37 1.19 CAD 1.37 1.19 CAD 1.77 CAD 1.77 CAD 1.52 $1.02 US$ 1.02 1.02Romania Bucharest Bombardier Germany Canada Movia CAD 1.47 CAD 1.46 1.27 CAD 1.40 1.22 CAD 1.53 CAD 1.47 CAD 1.45 $1.20 US$ 1.20 1.20Singapore MRT Alstom France France NEL CAD 1.87 CAD 1.64 1.43 CAD 1.64 1.43 CAD 2.09 CAD 2.09 CAD 1.86 $1.27 US$ 1.27 1.40Singapore MRT Kawasaki Japan Japan Changi CAD 1.54 CAD 1.36 1.18 CAD 1.36 1.18 CAD 1.73 CAD 1.73 CAD 1.73 $1.18 US$ 1.18 1.18South Korea Seoul Hanjin Heavy Ind Korea Korea CAD 2.81 CAD 2.57 2.24 CAD 2.57 2.24 CAD 3.04 CAD 3.04 CAD 2.45 $1.80 US$ 1.80 1.80Spain Barcelona Alstom Spain France Metropolis, Line 9 CAD 1.88 CAD 1.86 1.33 CAD 1.81 1.29 CAD 1.95 CAD 1.89 CAD 1.70 $1.09 Euro 1.16 1.16Spain Barcelona CAF Spain Spain 5000 series CAD 1.73 CAD 1.70 1.21 CAD 1.70 1.21 CAD 1.77 CAD 1.77 CAD 1.55 $0.99 Euro 1.05 1.05Spain Barcelona CAF Spain Spain Series 6000 CAD 2.01 CAD 1.93 1.37 CAD 1.93 1.37 CAD 2.08 CAD 2.08 CAD 1.97 $1.62 Euro 1.30 1.30Spain Bilbao CAF/ Adtranz Spain Spain Line 2 CAD 2.78 CAD 2.59 306.65 CAD 2.59 306.65 CAD 2.98 CAD 2.98 CAD 2.43 $1.60 Pta 250.00 250.00Spain Madrid Metro CAF/ Alstom Spain Spain 6000 CAD 2.56 CAD 2.39 282.16 CAD 2.39 282.16 CAD 2.74 CAD 2.74 CAD 2.23 $1.57 Pta 230.00 230.00Spain Madrid Metro AnsaldoBreda Italy Italy Series 9000 CAD 1.96 CAD 1.83 1.30 CAD 1.83 1.30 CAD 2.09 CAD 2.09 CAD 1.91 $1.48 Euro 1.19 1.19Spain Valencia Alstom Spain France CAD 2.47 CAD 2.31 1.64 CAD 2.31 1.64 CAD 2.64 CAD 2.64 CAD 2.41 $1.86 Euro 1.50 1.50Sweden Stockholm (SL) Adtranz Sweden Germany C20/ Vagn 2000 CAD 1.81 CAD 1.62 1.41 CAD 1.69 1.48 CAD 1.91 CAD 2.00 CAD 1.71 $1.26 US$ 1.26 1.01Sweden Stockholm (SL) Bombardier Sweden Canada C20/ Vagn 2000 CAD 1.09 CAD 1.11 1.11 CAD 1.08 1.08 CAD 1.11 CAD 1.08 CAD 1.02 $0.66 C$ 1.02 1.28Taiwan Taipei Kawasaki Japan Japan CAD 1.94 CAD 1.78 50.53 CAD 1.78 50.53 CAD 2.11 CAD 2.11 CAD 1.97 $1.37 NT 47.35 47.35Taiwan Taipei TRTC Siemens Austria Germany CAD 2.90 CAD 2.98 2.12 CAD 2.88 2.05 CAD 2.92 CAD 2.83 CAD 2.52 $1.64 Euro 1.83 1.83Turkey Istanbul Alstom France France CAD 2.44 CAD 2.28 1.62 CAD 2.28 1.62 CAD 2.59 CAD 2.59 CAD 2.33 $1.63 Euro 1.45 1.31UK London Underground Bombardier UK UK Victoria Line CAD 2.58 CAD 2.27 1.12 CAD 2.27 1.12 CAD 2.89 CAD 2.89 CAD 2.59 GBP 1.11 1.00USA Atlanta (MARTA) Breda Italy/ USA Italy CQ 312 CAD 2.89 CAD 2.46 2.14 CAD 2.63 2.29 CAD 3.13 CAD 3.35 CAD 2.74 $1.88 US$ 1.88 1.88USA Boston (MBTA) Bombardier Canada Canada No. 3 Red CAD 2.64 CAD 2.62 2.28 CAD 2.62 2.28 CAD 2.66 CAD 2.66 CAD 1.99 $1.71 US$ 1.71 1.54USA Boston (MBTA) Siemens/ Talgo TTA USA Germany No. 5 Blue Line CAD 2.64 CAD 2.18 1.90 CAD 2.33 2.03 CAD 2.92 CAD 3.12 CAD 2.79 $1.81 US$ 1.81 1.81USA Chicago Bombardier Canada Canada CAD 1.81 CAD 1.81 1.58 CAD 1.81 1.58 CAD 1.81 CAD 1.81 CAD 1.81 $1.58 US$ 1.58 1.42USA Los Angeles MTA Breda Italy/ USA Italy Red Line CAD 3.14 CAD 2.95 2.57 CAD 3.24 2.82 CAD 3.04 CAD 3.34 CAD 2.12 $1.79 US$ 1.79 1.79USA Los Angeles MTA Breda Italy/ USA Italy Red Line CAD 3.12 CAD 2.72 2.36 CAD 2.99 2.60 CAD 3.23 CAD 3.56 CAD 2.64 $1.93 US$ 1.93 1.93USA New York (NYCT) Bombardier USA Canada R142 CAD 1.66 CAD 1.46 1.27 CAD 1.55 1.35 CAD 1.75 CAD 1.87 CAD 1.65 $1.20 US$ 1.20 1.33USA New York (NYCT) Kawasaki USA Japan R142a CAD 1.91 CAD 1.80 1.57 CAD 1.68 1.46 CAD 2.16 CAD 2.02 CAD 2.04 $1.48 US$ 1.48 1.33USA New York (NYCT) Kawasaki USA USA R143 CAD 2.63 CAD 2.32 2.02 CAD 2.32 2.02 CAD 2.95 CAD 2.95 CAD 2.78 $1.90 US$ 1.90 1.90USA New York (NYCT) Bombardier USA Canada R142 CAD 1.88 CAD 1.60 1.40 CAD 1.61 1.40 CAD 2.15 CAD 2.16 CAD 2.05 $1.33 US$ 1.33 1.20USA New York (NYCT) Kawasaki USA USA R142a CAD 1.44 CAD 1.23 1.07 CAD 1.23 1.07 CAD 1.64 CAD 1.64 CAD 1.57 $1.02 US$ 1.02 1.13USA New York (NYCT) Alstom/ Kawasaki Brazil/ USA USA R160 CAD 2.63 CAD 2.48 2.16 CAD 1.96 1.70 CAD 3.39 CAD 2.68 CAD 2.55 $1.62 US$ 1.62 1.46USA New York (NYCT) Kawasaki USA USA R142a CAD 1.54 CAD 1.37 1.19 CAD 1.37 1.19 CAD 1.70 CAD 1.70 CAD 1.61 $1.13 US$ 1.13 1.25USA New York (PATH) Kawasaki USA USA PA-5 CAD 1.96 CAD 1.91 1.66 CAD 1.91 1.66 CAD 2.00 CAD 2.00 CAD 1.97 $1.63 US$ 1.63 1.47USA Philadelphia (SEPTA) Adtranz USA Germany M4 CAD 2.12 CAD 1.78 1.55 CAD 1.85 1.61 CAD 2.38 CAD 2.48 CAD 2.07 $1.34 US$ 1.34 1.34USA San Francisco (BART) MK USA USA C2 CAD 2.69 CAD 2.62 2.28 CAD 2.62 2.28 CAD 2.76 CAD 2.76 CAD 2.35 $1.95 US$ 1.95 1.95USA Washington DC (WMATA) Breda Italy/ USA Italy 4000 CAD 2.21 CAD 2.08 1.81 CAD 2.28 1.99 CAD 2.14 CAD 2.35 CAD 1.49 $1.26 US$ 1.26 1.26USA Washington DC (WMATA) AAI/CAF Spain/ USA Spain 5000 CAD 2.75 CAD 2.33 2.03 CAD 2.51 2.18 CAD 2.97 CAD 3.19 CAD 2.59 $1.77 US$ 1.77 1.77USA Washington DC (WMATA) Alstom USA USA 6000 CAD 2.49 CAD 2.10 1.83 CAD 2.10 1.83 CAD 2.88 CAD 2.88 CAD 2.74 $1.74 US$ 1.74 1.74

DATA NOT USED IN MAIN ANALYSIS

USA Boston (MBTA) Bombardier USA Canada No. 5 Blue Line CAD 3.76 $2.44 US$ 2.44 2.20USA Boston (MBTA) Kawasaki USA USA No. 5 Blue Line CAD 4.07 $2.64 US$ 2.64 2.38USA Boston (MBTA) Kinkisharyo USA Japan No. 5 Blue Line CAD 2.96 $1.92 US$ 1.92 1.73Canada Montreal Bombardier Canada Canada CAD 2.98 $2.62 C$ 2.98 3.28USA Miami Bombardier USA Canada CAD 2.53 $2.20 US$ 2.20 2.20USA Boston (MBTA) Bombardier Canada Canada No. 3 Red CAD 1.74 $1.49 US$ 1.49 1.49USA New York (NYCT) Alstom/ Kawasaki Brazil/ USA USA R160 4 car CAD 2.08 $1.32 US$ 1.32 1.32USA New York (NYCT) Alstom/ Kawasaki Brazil/ USA USA R160 5 car CAD 2.06 $1.31 US$ 1.31 1.31

Base currency

Normalized Price, orig currency, base year

Price, orig currency, base year

Average Price Per CarNormalized Prices to TTC basis


APPENDIX 4 – COMPARATIVE PRICE MODEL - ESCALATED IN BUILDER HOME COUNTRY

Average per Vehicle Price, Escalated in Home Country of Builder, then Converted to C$

CAD 0.00

CAD 0.50

CAD 1.00

CAD 1.50

CAD 2.00

CAD 2.50

CAD 3.00

CAD 3.50

CAD 4.0019

88

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Ave

rage

Pric

e pe

r Veh

icle



APPENDIX 5 – COMPARATIVE PRICE MODEL - ESCALATED IN COUNTRY OF MANUFACTURE

Average per Vehicle Price, Escalated in Country of Manufacture, then Converted to C$

CAD 0.00

CAD 0.50

CAD 1.00

CAD 1.50

CAD 2.00

CAD 2.50

CAD 3.00

CAD 3.50

CAD 4.00

CAD 4.50

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Ave

rage

Pric

e pe

r Veh

icle



APPENDIX 6 – COMPARATIVE PRICE MODEL - ESCALATED IN BUILDER HOME COUNTRY, CAD BASIS

Average per Vehicle Price, Escalated in Home Country of Builder using C$ basis at time of Order

CAD 0.00

CAD 0.50

CAD 1.00

CAD 1.50

CAD 2.00

CAD 2.50

CAD 3.00

CAD 3.50

CAD 4.00

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Ave

rage

Pric

e pe

r Veh

icle



APPENDIX 7 – COMPARATIVE PRICE MODEL - ESCALATED IN COUNTRY OF MANUFACTURE, CAD BASIS

Average per Vehicle Price, Escalated in Country of Manufacture, using C$ basis at time of Order

CAD 0.00

CAD 0.50

CAD 1.00

CAD 1.50

CAD 2.00

CAD 2.50

CAD 3.00

CAD 3.50

CAD 4.00

CAD 4.50

CAD 5.00

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Ave

rage

Pric

e pe

r Veh

icle



APPENDIX 8 – COMPARATIVE PRICE MODEL - ESCALATED IN HOME COUNTRY OF BUILDER, NORTH AMERICAN ORDERS ONLY

Average per Vehicle Price, Escalated in Home Country of Builder, then Converted to C$ - North American Orders Only

CAD 0.00

CAD 0.50

CAD 1.00

CAD 1.50

CAD 2.00

CAD 2.50

CAD 3.00

CAD 3.50

CAD 4.00

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Ave

rage

Pric

e pe

r Veh

icle



APPENDIX 9 – COMPARATIVE PRICE MODEL - ESCALATED IN COUNTRY OF MANUFACTURE, NORTH AMERICAN ORDERS ONLY

Average per Vehicle Price, Escalated in Country of Manufacture, then Converted to C$ - North

American Orders Only

CAD 0.00

CAD 0.50

CAD 1.00

CAD 1.50

CAD 2.00

CAD 2.50

CAD 3.00

CAD 3.50

CAD 4.00

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Ave

rage

Pric

e pe

r Veh

icle



APPENDIX 10 – COMPARATIVE PRICE MODEL - ESCALATED IN HOME COUNTRY OF BUILDER, CAD BASIS, NORTH AMERICAN ORDERS ONLY

Average per Vehicle Price, Escalated in Home Country of Builder using C$ basis at time of Order - North American Orders Only

CAD 0.00

CAD 0.50

CAD 1.00

CAD 1.50

CAD 2.00

CAD 2.50

CAD 3.00

CAD 3.50

CAD 4.00

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Ave

rage

Pric

e pe

r Veh

icle



APPENDIX 11 – COMPARATIVE PRICE MODEL - ESCALATED IN COUNTRY OF MANUFACTURE, CAD BASIS, NORTH AMERICAN ORDERS ONLY

Average per Vehicle Price, Escalated in Country of Manufacture, using C$ basis at time of Order - North American Orders Only

CAD 0.00

CAD 0.50

CAD 1.00

CAD 1.50

CAD 2.00

CAD 2.50

CAD 3.00

CAD 3.50

CAD 4.00

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Ave

rage

Pric

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icle



APPENDIX 12 – COMPONENT PRICE MODEL INPUT DATA (US DOLLARS)

Final Report, August 23, 2006 - 102 -

Vehicle System/ Components (Number per Car) Cost (2000)

Adjusted Cost 2006

Cost (1996) Adjusted Cost 2006





Car Body (75 ft) 619,766$ 655,712$ 244,294$ 259,416$ 417,965$ 443,837$ 455,353$ 483,539$ Articulation Bellows (1

-

2)Windows (6 per side)

11,808$ 12,446$ 7,744$ 8,223$ 10,681$ 11,342$ 24,934$ 26,477$ Seats (54-62) 13,909$ 14,770$ 7,655$ 8,129$ 9,254$ 9,827$ Trucks & Suspension (2) 254,022$ 267,739$ 211,397$ 222,263$ 79,165$ 84,065$ 67,084$ 71,236$ 119,740$ 127,152$ Wheels & Axles (4, 28") 24,818$ 26,354$ 19,423$ 20,625$ 17,808$ 18,910$ Couplers (2) 28,172$ 29,693$ 72,051$ 75,754$ 31,125$ 33,052$ 15,397$ 16,350$ 38,056$ 40,412$ Train and Car Controls $ 32,628 $ 34,279 84,713$ 89,067$ 23,064$ 24,492$ 36,517$ 38,777$ 74,536$ 79,150$ Power Collector 3,851$ 4,089$ 3,496$ 3,712$ 4,797$ 5,094$ Auxiliary Electrical Equipment $ 74,916 $ 78,707 106,596$ 112,352$ 111,962$ 117,717$ 30,957$ 32,873$ 44,326$ 47,070$ 38,859$ 41,264$ Propulsion (2-4) $ 228,910 $ 240,493 472,983$ 498,524$ 176,157$ 185,211$ 273,950$ 290,908$ 225,812$ 239,790$ 345,844$ 367,252$ Friction Braking 72,192$ 76,090$ 133,697$ 140,569$ 83,644$ 88,822$ 73,593$ 78,148$ 92,696$ 98,434$ Doors (8) 90,021$ 94,882$ 89,160$ 93,743$ 54,656$ 58,039$ 45,503$ 48,320$ 133,901$ 142,189$ HVAC (2) 100,044$ $ 105,106 97,450$ 102,712$ 95,581$ 100,494$ 87,167$ 92,563$ 88,460$ 93,936$ 123,345$ 130,980$ Communications 19,015$ 20,042$ 28,557$ 30,025$ 18,364$ 19,501$ 18,998$ 20,174$ 32,808$ 34,839$ Information Signs 17,135$ 18,196$ 24,260$ 25,762$ 35,206$ 37,385$ Lighting $ 21,759 $ 22,860 41,140$ 43,362$ 34,043$ 35,793$ 15,280$ 16,226$ 13,719$ 14,568$ 28,521$ 30,286$ Vehicle Monitoring System $ 24,422 $ 25,658 35,807$ 37,647$ Other Misc. 6,085$ 6,462$

Car Assembl

y 115,070$ 122,193$ 56,204$ 59,683$ 216,229$ 229,614$ Truck Assembly 10,056$ 10,678$ 8,844$ 9,391$ 18,439$ 19,580$ Mock-ups 400$ 425$ 3,011$ 3,197$ 3,893$ 4,134$ Contract Management $ 25,774 $ 27,078 81,361$ 85,543$ 3,325$ 3,531$ 92,634$ 98,368$ 15,221$ 16,163$ Design & Engineering

$ 20,278 $ 21,304 123,404$ 130,068$ 93,107$ 97,892$ 24,505$ 26,022$ 17,773$ 18,873$ 179,329$ 190,429$ Testin

g $ 19,695 $ 20,692 27,222$ 28,621$ 15,012$ 15,941$ 35,137$ 37,312$

System Assurance $ 928 $ 975 20,073$ 21,104$ 16,687$ 17,720$ 54,400$ 57,767$ Warranty 27,767$ 29,194$ 2,622$ 2,784$ Field Support $ 8,694 $ 9,134 24,523$ 26,041$ 4,462$ 4,738$ 43,498$ 46,191$ Manuals $ 275 $ 289 18,461$ 19,458$ 49,961$ 52,529$ Training $ 6,126 $ 6,436 14,914$ 15,719$ 11,162$ 11,736$ Special Tools, Test and Diagnostic Equipment 59,211$ 62,408$ 70,375$ 73,993$ Spare Parts

$ 13,776 $ 14,473 51,870$ 54,671$ 71,191$ 74,851$

Other $ 9,837 $ 10,335 455$ 480$ 2,501$ 2,630$ 7,591$ 8,061$ 47,242$ 50,166$ 10,969$ 11,648$ Duty & Taxes 1,249$ 1,326$ 26,048$ 27,660$ 1,355$ 1,439$

Total Vehicle Components 1,692,891$ 1 783,996$ 1,009,123$ 1,071,588$ 1,118,974$ 1,188,238$ 1,575,658$ 1,673,191$ Total Contract Cost per Vehicle 1,550,000$ 1,643,000$ 2,147,612$ 2 262,089$ 1,195,842$ 1,269,865$ 1,409,513$ 1,496,762$ 2,154,128$ 2,287,469$

r ~500 cars New Subway car - losing bid

New subway caMajor subway car overhaul -

,

,

new component prices cars carsNew subway car ~100 New subway car ~200 cars New subway car ~1000

Vehicle System/ Components (Number per Car)







Car Body (75 ft) 348,837$ 370,430$ 393,250$ 400,761$ Articulation Bellows (1-2) 5,200$ 5,299$ 6,195$ 7,254$ Windows (6 per side)

12,039$ 12,784$ 23,920$ 24,377$ Seats (54-62) 15,925$ 16,911$ 31,460$ 32,061$ 15,398$ 20,633$ Trucks & Suspension (2) 67,786$ 71,982$ 147,680$ 150,501$ 53,963$ 72,310$ Wheels & Axles (4, 28") 8,071$ 8,571$ 18,720$ 19,078$ Couplers (2) 22,036$ 23,400$ 60,000$ 61,146$ 26,841$ 35,967$ Train and Car Controls 37,654$ 39,985$ 62,333$ 63,524$ Power Collector 3,807$ 4,043$ 6,240$ 6,359$ Auxiliary Electrical Equipment 26,295$ 27,923$ 103,740$ 105,721$ 79,301$ 106,263$ Propulsion (2-4) 243,469$ 258,540$ 441,982$ 450,424$ 397,516$ 532,671$ Friction Braking 76,099$ 80,810$ 145,600$ 148,381$ 58,537$ 78,440$ Doors (8) 124,544$ 132,253$ 175,760$ 179,117$ 22,303$ 29,886$ HVAC (2) 99,236$ 105,379$ 117,520$ 119,765$ 86,838$ 91,527$ 43,926$ 58,861$ Communications 29,320$ 31,135$ 39,052$ 39,798$ Information Signs 20,676$ 21,956$ Lighting 10,514$ 11,165$ 23,920$ 24,377$ Vehicle Monitoring SystemOther Misc. 7,759$ 8,239$ 72,702$ 74,091$

Car Assembly 20,909$ 22,203$ 385,840$ 393,210$ Truck Assembly 12,358$ 13,123$ Mock-ups 8,093$ 8,594$ 143$ 146$ Contract Management 55,572$ 59,012$ 54,080$ 55,113$ Design & Engineering

35,496$ 37,693$ 17,829$ 18,170$ Testing 22,914$ 24,332$ 44,200$ 45,044$ System Assurance 12,030$ 12,775$ 23,400$ 23,847$ Warranty 7,447$ 7,908$ Field Support 3,415$ 3,626$ Manuals 643$ 655$ 42,448$ 44,825$ Training 714$ 728$ 19,551$ 20,646$ Special Tools, Test and Diagnostic Equipment 8,571$ 8,735$ 51,300$ 54,173$ Spare Parts 86,649$ 91,328$ 146,744$ 154,962$ Other 37,396$ 39,711$ Duty & Taxes 43,112$ 45,781$

Total Vehicle Components 1,154,067$ 1,225,504$ 2,623,748$ 2,770,678$ Total Contract Cost per Vehicle 1,412,809$ 1,500,262$ 1,985,000$ 2,092,190$ 3,083,288$ 3,255,952$ 1,663,029$ 2,228,459$

TTC T1 CarsLRV car LRV car LRV carNew subway car ~300 cars

New Subway Car Engineering Cost Estimate


APPENDIX 13 – COMPONENT PRICE MODEL RESULTS

Component/ Line Item (quantity per car) High Low AverageCar Body 753,228$ 297,995$ 500,400$ Articulation Bellows (1-2) 8,333$ 6,087$ 7,210$ Windows (6) 30,415$ 9,446$ 18,312$ Seats (54-62) 36,829$ 9,338$ 19,591$ Trucks & Suspension (2) 307,557$ 81,831$ 153,246$ Wheels & Axles (4) 30,274$ 9,845$ 21,490$ Couplers (2) 87,020$ 18,782$ 45,342$ Train and Car Controls 102,313$ 28,134$ 60,599$ Power Collector 7,305$ 4,265$ 5,352$ Auxiliary Electrical Equipment 135,223$ 32,075$ 85,502$ Propulsion (2-4) 611,889$ 212,756$ 391,051$ Friction Braking 170,448$ 87,406$ 113,392$ Doors (8) 205,755$ 34,331$ 111,774$ HVAC (2) 150,459$ 67,614$ 116,122$ Communications 45,717$ 22,401$ 32,084$ Information Signs 42,945$ 20,902$ 29,665$ Lighting 49,810$ 12,825$ 28,522$ Vehicle Monitoring System 43,246$ 29,474$ 34,753$ Other Misc. 85,109$ 7,423$ 33,999$

Car Assembly 451,687$ 25,505$ 189,975$ Truck Assembly 22,492$ 10,788$ 15,155$ Mock-ups 9,872$ 167$ 3,790$ Contract Management 112,997$ 4,056$ 56,584$ Design & Engineering 218,750$ 20,872$ 77,603$ Testing 51,743$ 18,312$ 32,919$ System Assurance 66,358$ 14,674$ 30,605$ Warranty 33,536$ 3,198$ 15,273$ Field Support 53,060$ 4,166$ 20,615$ Manuals 60,341$ 753$ 27,815$ Training 18,057$ 836$ 10,792$ Special Tools, Test and Diagnostic Equipment 84,997$ 10,034$ 55,573$ Spare Parts 104,910$ 62,802$ 84,565$ Other 57,627$ 551$ 21,576$ Duty & Taxes 52,589$ 1,524$ 21,885$ Vehicle Price Based on Above Component Costs 2,903,876$ 992,929$ 1,808,406$ Contract Price per Vehicle Based on Above Costs 4,302,892$ 1,171,166$ 2,473,131$


APPENDIX 14 – COMPONENT PRICE MODEL RESULTS FOR PROPORTIONALITY

Line Item High Low AverageCar Assembly 10% 1% 6%Truck Assembly 1% 1% 1%Mock-ups 1% 0.03% 0.25%Contract Management 7% 1% 3%Design & Engineering 8% 1% 4%Testing 2% 1% 1%System Assurance 3% 1% 1%Warranty 1% 0.19% 0.67%Field Support 2% 0.24% 1.16%Manuals 2% 1% 2%Training 1% 1% 1%Special Tools, Test and Diagnostic Equipment 4% 2% 3%Spare Parts 5% 3% 4%Other 3% 0.03% 1.21%Duty & Taxes 3% 0.06% 1.27%Total Percentage of Overall Cost 27% 11% 19%Total Percentage of Overall Cost Based on the Above Values 52% 13% 30%


APPENDIX 15 – INPUT DATA FOR FTA TERM MODEL

Vehicle Cost Data From FTA Heavy Rail Capital Cost Study UpdateNotes:(1) These historical data were obtained from a review of the contracts for each project(2) Vehicle procurement costs may include cost of vehicle design, parts and/or other vehicle procurement related costs

* *

* Historical costs inflated using Mean's Construction Index. This index increased at an average annual rate of about 2.5% since the mid-eighties.** This project included rehabilitation of a fleet of older cars, and the value in the FTA TERM database reflected this inclusive number. The value of the new cars alone was substituted to provide a more accurate result

Agency Project Vehicle Order

Number of

Vehicles Total Cost Year

Cost per vehicle ($YOE)

Estimated cost per vehicle ($2006)

Estimated cost per vehicle

(CAD2006)MARTA North South Line A 29 $22,062,898 1981 $760,790 $1,564,430 CAD 1,797,162.56

B 86 $97,570,116 1981 $1,134,536 $2,332,974 CAD 2,680,039.35C 54 $79,179,057 1986 $1,466,279 $2,506,652 CAD 2,879,554.58

North Line Dunwoody Extension** A 56 $126,900,000 1998 $1,875,000 $2,344,853 CAD 2,693,684.89MBTA Orange Line A 120 $76,302,034 1978 $635,850 $1,710,766 CAD 1,965,268.66MD MTA Metro Sections A and B A 72 $56,895,068 1982 $790,209 $1,494,676 CAD 1,717,031.68

B 28 $19,457,705 1982 $694,918 $1,314,433 CAD 1,509,975.04CTA Southwest Orange Line A 88 $71,368,000 1989 $811,000 $1,267,508 CAD 1,456,069.37LACMTA Red Line Segment I A 30 $53,811,000 1989 $1,793,700 $2,803,366 CAD 3,220,408.91

Red Line Segments 2A & 2B A 30 $58,015,859 1994 $1,933,862 $2,666,334 CAD 3,062,991.66Red Line Segment III A 30 $60,225,000 1998 $2,007,500 $2,510,556 CAD 2,884,038.62

Miami Dade Metrorail A 136 $108,087,689 1982 $794,762 $1,503,288 CAD 1,726,925.12San Juan Tren Urbano A 74 $139,564,769 2001 $1,886,010 $2,170,083 CAD 2,492,915.81WMATA Metrorail A 300 $115,846,322 1972 $386,154 $1,597,244 CAD 1,834,858.56

B 366 $358,188,828 1979 $978,658 $2,437,209 CAD 2,799,780.30C 100 $198,611,017 1989 $1,986,110 $3,104,083 CAD 3,565,862.12

SEPTA Frankford Rehabilitation A 220 $295,799,361 2001 $1,344,543 $1,547,059 CAD 1,777,207.27

File: Copy of HR Vehicles Historic Purchase Costs.xls


APPENDIX 16 – ESCALATION APPLIED TO T1 CAR PRICING FROM 1992

DATA IN BOX PROVIDED BY TTC FROM SEPTEMBER 1992 BID SHEETS

SPECIFIED ALTERNATE FOR QUANTITY 216 SUBWAY CARS WITH AC PROPULSION

Year Factor

1992 1.340402EQUIPMENT TYPE SPECIFIED ALTERNATE BID** 1993 1.295076Traction Motors & Traction Control 1994 1.223075Coupler 1995 1.140534Motor Driven Air Compressor 1996 1.136072Traction Gearbox 1997 1.128258Truck 1998 1.124166Door Operators & Controls 1999 1.104941Inverter Set 2000 1.061165Passenger Seats 2001 1.051286Air Brake System 2002 1.050655Driver's Single Handle Power and Brake Controller 2003 1.064635Battery Charger 2004 1.033Car-Carried Communication System 2005 1.0174Nickel-Cadmium Battery 2006 1Air-Conditioning System esc 04-06 0.033Other Equpiment & Services esc 05-06 0.017Total for Subway Cars with AC PropulsionContract spares (per 7/25/06 email from C. Heald)Warranty SparesSTTEPer car amount of above three itemsTTC Bonding and Escalation allowanceGRAND TOTAL $2,158,069

PRICE ESCALATED TO 2006 $2,892,679 Excludes PST, GST, NST extrasper TTC email of August 8, 2006

Adjustments for NST equivalenceAdd NST extras, averaged per car $78,986 Includes cab simulator, YMSS, profile measurement, test track, CBT etc.PRICE FOR COMPARISON PURPOSES $2,971,665

** - detailed pricing suppressed due to commercial sensitivity

The following is the specified Alternate Price Breakdown for the 216 Quantity of Subway Cars with AC Propulsion.

Escalation factor to mid-2006*

* - Source - Organisation for Economic Co-operation and Development, Producer Price Index for Canada, 1992-2004, Bank of Canada PPI for 2005 and 2006


APPENDIX 17 – NST BASIS PRICE DERIVATION

Description QTY

(A)Unit Price




(A)

FederalGoods


on (A)and (B)

Total ExtendedPrice (CAD $) Denominator Per car price

Six Car Subway Train Sets and all associated Work per the Particular Specifications 39 12,804,677$ 1,024,374$ 768,281$ 569,295,940$ 234 2,134,113$ TTC allowance for bonding and escalation 1 44,052,632$ 3,524,211$ 2,643,158$ 50,220,000$ 234 188,259$ Sub Total 619,515,940$ Cab Simulator and all associated Work per the Particular Specifications 1 2,901,961$ 232,157$ 174,118$ 3,308,236$

Computer Based Training 1 6,453,110$ 516,249$ 387,187$ 7,356,545$ Provision of Subway Profiles Measurement Services (2) 1 1,374,976$ 109,998$ 82,499$ 1,567,473$

YardMaintenance Support System (YMSS)

1 1,040,634$ 83,251$ 62,438$ 1,186,323$

Consumable Spare Parts 1 1,862,415$ 148,993$ 111,745$ 2,123,153$ 234 7,959$ STTE 1 6,574,701$ 525,976$ 394,482$ 7,495,159$ 234 28,097$ Contractor's Test Track 1 6,711,983$ 536,959$ 402,719$ 7,651,661$

650,204,490$ 2,358,428$

Option 5 a - Other Maintenance Spares 1 12,086,452$ 725,187$ 966,916$ 13,778,555$ 234 51,652$ Option 5 b - Special Spares 1 5,702,405$ 342,144$ 456,192$ 6,500,742$ 234 24,369$ Option 5 c - Strategic Spares 1 1,614,989$ 96,899$ 129,199$ 1,841,087$ 234 6,902$ Option 6 - New battery charger system 1 348,193$ 20,892$ 27,855$ 396,940$ Option 9a - active route map, 4 per car 936 1,936$ 116$ 155$ 2,065,789$ 234 7,744$ GRAND TOTAL OPTIONS IN BASE AWARD 24,583,113$ 90,666$

GRAND TOTAL PRICE $674,787,603 2,449,094$

NOTE: Detailed prices have been suppressed due to commercial sensitivity


Options included in Base Award

DERIVATION OF NST BASIS PRICE


APPENDIX 18 – NST TOTAL PRICE WITHOUT TAXES DERIVATION

Description QTY

(A)Unit Price




(A)

FederalGoods


on (A)and (B)


Six Car Subway Train Sets and all associated Work per the Particular Specifications 39 12,804,677$ 1,024,374$ 768,281$ 569,295,940$ 234 2,134,113$ TTC allowance for bonding and escalation 1 44,052,632$ 3,524,211$ 2,643,158$ 50,220,000$ 234 188,259$ Sub Total 619,515,940$ Cab Simulator and all associated Work per the Particular Specifications 1 2,901,961$ 232,157$ 174,118$ 3,308,236$ 234 12,402$ Computer Based Training 1 6,453,110$ 516,249$ 387,187$ 7,356,545$ 234 27,577$ Provision of Subway Profiles Measurement Services (2) 1 1,374,976$ 109,998$ 82,499$ 1,567,473$ 234 5,876$ YardMaintenance Support System (YMSS)

1 1,040,634$ 83,251$ 62,438$ 1,186,323$ 2344,447$

Consumable Spare Parts 1 1,862,415$ 148,993$ 111,745$ 2,123,153$ 234 7,959$ STTE 1 6,574,701$ 525,976$ 394,482$ 7,495,159$ 234 28,097$ Contractor's Test Track 1 6,711,983$ 536,959$ 402,719$ 7,651,661$ 234 28,684$

650,204,490$ 2,437,414$

Option 5 a - Other Maintenance Spares 1 12,086,452$ 725,187$ 966,916$ 13,778,555$ 234 51,652$ Option 5 b - Special Spares 1 5,702,405$ 342,144$ 456,192$ 6,500,742$ 234 24,369$ Option 5 c - Strategic Spares 1 1,614,989$ 96,899$ 129,199$ 1,841,087$ 234 6,902$ Option 6 - New battery charger system 1 348,193$ 20,892$ 27,855$ 396,940$ 234 1,488$ Option 9a - active route map, 4 per car 936 1,936$ 116$ 155$ 2,065,789$ 234 7,744$ GRAND TOTAL OPTIONS IN BASE AWARD 24,583,113$ 92,154$

GRAND TOTAL PRICE $674,787,603 2,529,568$



DERIVATION OF NST TOTAL PRICE, WITHOUT TAXES


APPENDIX 19 – NST EXTRAS DERIVATION

Description QTY

(A)Unit Price




(A)

FederalGoods


on (A)and (B)


Six Car Subway Train Sets and all associated Work per the Particular Specifications 39 12,804,677$ 1,024,374$ 768,281$ 569,295,940$

TTC allowance for bonding and escalation 1 44,052,632$ 3,524,211$ 2,643,158$ 50,220,000$ Sub Total 619,515,940$ Cab Simulator and all associated Work per the Particular Specifications 1 2,901,961$ 232,157$ 174,118$ 3,308,236$ 234 12,402$ Computer Based Training 1 6,453,110$ 516,249$ 387,187$ 7,356,545$ 234 27,577$ Provision of Subway Profiles Measurement Services (2) 1 1,374,976$ 109,998$ 82,499$ 1,567,473$ 234 5,876$ YardMaintenance Support System (YMSS)

1 1,040,634$ 83,251$ 62,438$ 1,186,323$ 2344,447$

Consumable Spare Parts 1 1,862,415$ 148,993$ 111,745$ 2,123,153$ STTE 1 6,574,701$ 525,976$ 394,482$ 7,495,159$ Contractor's Test Track 1 6,711,983$ 536,959$ 402,719$ 7,651,661$ 234 28,684$

650,204,490$ 78,986$

Option 5 a - Other Maintenance Spares 1 12,086,452$ 725,187$ 966,916$ 13,778,555$ Option 5 b - Special Spares 1 5,702,405$ 342,144$ 456,192$ 6,500,742$ Option 5 c - Strategic Spares 1 1,614,989$ 96,899$ 129,199$ 1,841,087$ Option 6 - New battery charger system 1 348,193$ 20,892$ 27,855$ 396,940$ 234 1,488$ Option 9a - active route map, 4 per car 936 1,936$ 116$ 155$ 2,065,789$ GRAND TOTAL OPTIONS IN BASE AWARD 24,583,113$ 1,488$

GRAND TOTAL PRICE $674,787,603 80,474$

NOTE: Detailed prices have been suppressed due to commercial sensitivity



DERIVATION OF NST EXTRAS


APPENDIX 20 – SIMULATOR PRICES

Reference Year Price (orig) Price (C$m) 2006 Price (C$m) SourceNYCT R160 - Arotech/ FAAC 2004 US$1.96m 1.51$ 1.56$ Press ReleaseGNER (UK) - 8 consoles - Corys 2006 GBP1m 0.49$ 0.49$ Press ReleaseAverage Results 1.02$


APPENDIX 21 – EVALUATION OF PRICE BREAKDOWN FOR CONSULTANTS

EquipmentBombardier Unit

Price per Train Set

Industry Data for Comparison from Component Price Model (price per 6

car train set) High/LowGangway HighHeat, Ventilation and Air Conditioning System LowCoupler (automatic) HighCab car door system (incl. Crew door) LowNon cab car door system LowTraction System (Cab Car) LowTraction System (Non-Cab Car) LowBraking System Control (including electronic brake control unit) Low

Auxiliary Supply System HighLighting System (including power supply and lighting diffusers) Low

Passenger Seating System HighWindow and Glazing LowCommunication System (incl. Passenger information system displays, PAIS, PA, Flashing System Map and Radio)

High

Total Low

Note: Detailed price data has been suppressed due to commercial sensitivity
