Los Angeles County

Metropolitan

Transportation

Authority

8~8 West Seventh Street

Suite 300

Los Angeles, CA 9oo~7

213.623.1194

RCC BOARD RECOMMENDATION

SPECIAL PROJECT PROPOSAL: MARKETING AND SALE OF

THE RCC CHANGE CONTROL SYSTEM (CCSTM)

The RCC Board approved staff’s recommendation.

This item was also reviewed by the Finance, Budget and

Efficiency Cc~nittee which concurred with RCC recommendation

to adopt the Special Project Proposal in concept and market

and enter into sales and service agreements with outsideagencies covering the Change Control System.

Los Angeles County

Metropolitan

Transportation

Authority

818 West Seventh Street

Suite ~oo

Los Angeles, CA 900[7

213.623.n94

Revised: December 7, 1993

TO: RCC BOARD MEMBERS - 01/10 MEETING

FROM: EDWARD McSPEDON FILE: R92-PM400

SUBJECT: SPECIAL PROJECT PROPOSAL: MARKETING AND SALE OF......... THE RCC CHANGE CONTROL SYSTEM (CCSTM)

ISSUE

In response to unsolicited outside agency interest in purchase of the RCCdeveloped CCS" system, Program Management staff has developed aSpecial Project Proposal and Plan for marketing and sale of the system tooutside agencies. A complete copy of the proposal is attached.

RECOMMENDATION

The RCC Board recommends that the LACMTA adopt the Special ProjectProposal in concept and that staff be allowed to proceed with enteringinto sales and services agreements with interested agencies.

Staff will track all expenses and revenues against a project code to beestablished for this purpose and will report all revenues and expenses tothe Board at the end of one year. The end-of-year report will also includestaff recommendations regarding project contination.

BUDGET ISSUES

Marketing costs for the initial year are estimated at approximately$150,000. Costs are primarily for staff time already budgeted for RCCproject technical and management support. Staff costs will be funded bye transfer from the approved MIS Consultant budget and will require nonet increase to LACMTA project budgets.

Based on initial potential customer response, revenues for the first yearare expected to be in the $75,000 to $225,000 (estimate based on 5 to15 sales at an average of $15,000 each). Therefore, maximum risk forthe first year is $150,000 (no sales) with a profit potential of $75,000 greater. If the project is successful and continued into a second year,sales would be expected to at least double, providing a profit potential of$300,000 or more.

Revenues will be used to offset ongoing LACMTA information systemdevelopment and maintenance costs.

MTA BOARD OF DIRECTORS12/07/93Page 2

BACKGROUND

System Development

The CCSTM system was developed by the RCC staff to assist in themanagement and documentation of contract change processing whenevaluation of commercially available systems indicated that nocommercial system fully met the needs of the MTA Rail Projects. Thesystem was originally installed for use on both Red and Green Lines inAugust 1991 and is currently used by all consultants to manage, track,and document design and contract changes, requests-for-information,requests-for-changes, claims, and contractor submittals.

Market Interest

In the last year, at least six other agencies have contacted RCCConfiguration Management expressing interest in acquiring the system.A fully functional evaluation copy was provided to the Dallas Area RapidTransit (DART) agency in February 1993, and is currently in use by thatagency. However, because of significant upgrades in cost handling(allowing for allocation of change costs to different projects and fundsources) and other improvements incorporated since that time, DART hasindicated willingness to purchase the latest release of the software.DART has already budgeted $100,000 for upgrades and improvements.The other interested agencies - several of whom have visited the RCCand seen the system in action - have all requested a demonstrationdiskette, and need to make "buy" decisions in early 1994.Based on the unsolicited interest in the system already expressed, Staffestimates that sale of the software and associated service andmaintenance agreements could produce revenues for the MTA/RCCgreater than $100,000 per year. These revenues would recover costs forinitial system development and maintenance, and help offsetdevelopment and maintenance costs for other information systemsneeded by the RCC to manage our projects.

Legal/Technical Issues

Legal counsel has reviewed the marketing proposal, and do not find anylegal barriers to the marketing and sale of the system. Counsel iscurrently pursuing copyright registration of the system, and will preparethe form of agreement to be used for sales and services. Counsel isconfident that the agreement can be structured to eliminate any MTAliability related to the program function.

LACMTA Accounting has verified that no federal funds were used indeveloping the CCS program. The LACMTA therefore has clear title tothe code. The "look and feel" of the program differs from known existing

MTA BOARD OF DIRECTORS12/07/93Page 3

"off-the-shelf" products, and we have clear documentation that thesystem was developed by the LACMTA from the ground up.

Dr. Chen, Director, LACMTA Management Information Systems hasreviewed the proposal and has agreed to provide the necessary technicalsupport. The dedicated technical support position will be funded via abudget transfer from the MIS consultant budget to the LACMTA MIS.Additionally, to adequately manage the marketing effort and ensure thatour "customers" would receive quality service a "marketing manager"familiar with both the software and the change control function will beassigned on a part-time basis from existing change control staff.

Conclusion

Staff believes that the establishment of this special project will providesome revenues for our projects which will be used to offset LACMTAinformation system upgrades and maintenance which will be necessary inany case. Successful use by other agencies will also promote theLACMTA reputation and visibility as the "standard of excellence in RailConstruction" and in development of management systems.

Prepared by:

Manager, ConfigurationManagement

EDWARD CHEN, Ph.D.Director, ManagementInformation Systems

Vice President, Program

EDWARD McSPEDON, P.E.Executive Officer, Constructionand President, Rail ConstructionCorporation

LAS:IasAttachmentsc:\wp51 \sy$\ccsmktlo.doc

PROPOSAL

MARKETING AND SALE OF THERCC CHANGE CONTROL SYSTEM ( CCSTM)

OVERVIEW

¯ BACKGROUND: DEVELOPMENT OF THE CCSra

The CCS~ was developed in-house by the RCC after determination thatavailable "off-the-shelf" software did not provide the information or level ofcontrol, or flexibility necessary to adequately support the requirements ofmultiple projects and multiple funding sources. The CCS~ was designed tointegrate with other RCC cost management and information systems.

The CCS~" is currently used on all Metro Rail Construction projects, and is beingimplemented by MTA Operations. The system is used by the RCC and ourseven major consultants. Data is accessed and shared using Local and WideArea Network technology. Over 6,000 changes (including all Red LineSegment-I) , 8,000 submittals, and 3,000 Requests-for-Information have beenlogged on the system to date.

CCS" provides real-time information ranging from high level summary tocomplete descriptive detail, including full text descriptions of the Who? What?Why? Where? and How Much? for all changes. Change and claims data ~provide a complete chronology-of-events leading up to the claim or change.

CCS" has received positive comments from our users and virtually all majoroutside auditors and program management oversight consultants. (ReferenceAttachment A)

PROPOSAL

MARKETING AND SALE OF THERCC CHANGE CONTROL SYSTEM ( CCSTM)

Page 2

MARKET INTEREST

Over the last year, unsolicited interest in use of the system (usually based on "wordof mouth" recommendations) and requests for an evaluation copy have beenreceived from:

DART (Dallas Area Rapid Transit)

The Orange Country Transportation Corridor Agencies

Sacramento Regional Rail Transit Authority

John Wayne Airport Construction Management

BART

The Los Angeles Metropolitan Water District

An evaluation copy has been installed at DART, and they have expressed interest inpurchasing our latest update. DART has budgeted $100,000 for system purchaseand maintenance. The other agencies have indicated that they will be making a"buy" decision related to change management software this fall.

PROPOSAL

MARKETING AND SALE OF THERCC CHANGE CONTROL SYSTEM ( CCSTM)

Page 3

¯ PROJECT GOALS

Provide revenue to recover system development costs and support ongoingmaintenance of the current MTA CCSTM and other RCC information systems, therebyreducing impact on RCC project budgets.

Gain recognition as the standard of excellence in rail construction as the leader indevelopment of contract change control and construction management supportsystems.

Provide state-of-the-art system upgrades that directly benefit the MTA CCSTM users andprojects at an accelerated schedule with minimum cost to project funding resources.

Establish lead position in establishing industry standards in the contract change processconsistent with, and supportive of, public funding agency requirements.

Provide professional growth and expansion opportunities to MTA staff consistent withthe special project concept.

Projected gross revenues from system sales and services are estimated to minimally be in the$100,000 - $200,000 per year range.

PROPOSAL

MARKETING AND SALE OF THERCC CHANGE CONTROL SYSTEM ( CCSTM}

Page 4

¯ PROJECT PLAN

Initial marketing and sales effort to be managed by the RCC Program Managementdepartment using staff currently responsible for the development and maintenance of thesystem.

Obtain project number and cost center coding necessary for revenue processing.

Issue basic marketing materials, protected demonstration diskette, and pricing list to theinterested parties listed above. Follow-up and obtain commitments where possible.

Legal counsel will provide form for sale and services agreements.

Issue basic marketing materials and demonstration diskette to other federally fundedagencies, or owning agencies of major capital projects. Follow-up and obtain commitmentswhere possible.

In addition to base software, provided initial set-up and training services. Provide othertechnical services (custom reports, data conversions, custom upgrades, and follow-uptraining) at an hourly rate. See Proposed Pricing List (Attachment

PROPOSAL

MARKETING AND SALE OF THERCC CHANGE CONTROL SYSTEM ( CCSTM)

Page 5

BUDGET ISSUES

¯ Estimated revenues to the MTA are greater than $100,000 annually.

¯ Revenues to be allocated back to the Special Project budget and used to supportongoing maintenance and development of information systems needed by the RCC.

LEGAL ISSUES

¯ Legal counsel have reviewed the marketing concept and find no legal barriers orobstructions to MTA marketing of in-house developed software to other agencies.

¯ A legal consultant is currently pursuing copyright registration of the software andtrademark registration of the CCSTM name.

¯ Legal counsel will provide the form of contract for sales and service agreements.

PRECEDENT

The City of Inglewood is marketing in-house developed software producing revenues for theCity of more than $1 million per year. (Reference article, LA Times, Monday, October 25,1993., Attachment C)

PROPOSAL

MARKETING AND SALE OF THERCC CHANGE CONTROL SYSTEM ( CCSTM)

Page 6

NEXT STEPS / APPROVAL REQUIRED

REQUEST BOARD APPROVAL OF THE FOLLOWING:

1. Approve the CCSTM Marketing and Sales effort as a special project, to be evaluated atthe end of one fiscal year.

2. Assign Jeffrey C. Christiansen as Project Manager, with contracting authority up to$50,000.

ATTACHMENT ARCC CHANGE CONTROL SYSTEM (CCS")

PROJECT MANAGEMENT CONSULTANT AND AUDITORS COMMENTS

HILL INTERNATIONAL - FEDERAL TRANSIT ADMINISTRATION PROJECTMANAGEMENT OVERSIGHT CONSULTANT

".. a valuable time saving device in the processing of Change Notices andChange Orders" - Executive Summary, Red Line Segment-2, Monthly Report,September 1991.

"..has brought a much needed consistency to these functions." - ChangeHandling, page 10, Red Line Segment-2, Monthly Report, April 1992.

"The effectiveness of this system is demonstrated by its contribution to thereduction in RFI turnaround time .... Our overall assessment is that the [CCS] loghas been developed into an excellent tool for tracking the resolution of RFI’s" -Executive Summary and Project Management Information Systems, Red LineSegment-2, Monthly Report, March 1993

"an excellent tracking tool [for submittals] in that it can provide a series ofreports which cover most situations" - Red Line Segment-2, Monthly Report, May1993.

" The documentation of COs was found to be extensive and thorough and theuniformity of the documentation was enhanced by the use of the centralizedCOS. - FINAL REPORT, Contract CTUM60-88-C-41014, Red Line Segment-2,September 30, 1993.

BUSINESS MANAGEMENT RESEARCH ASSOCIATES, INC.

"RCC has developed an excellent system to facilitate identification of changes andtracking the status of these changes." - Final Report of the PROCUREMENTSYSTEM REVIEW OF LOS ANGELES COUNTY TRANSPORTATION COMMISSION(LACTC) and its subsidiary RAIL CONSTRUCTION CORPORA TION (RCC), Angeles, California, September 1993.

MAClAS & MIRANDA, CERTIFIED PUBLIC ACCOUNTANTS (ERNST AND YOUNG) COUNTY TRIENNIAL PERFORMANCE AUDIT

"Another positive area is the Change Control System database to track progress ofall change orders. - Conclusion, Final Report on the Phase III Study and Evaluationof the Los Angeles County Transportation Commission and Railroad ConstructionCorporation’s system of internal accounting.

MTA CHANGE C0N~ROL SYSTEM

CC$o

ATTACHMENT B

PROPOSED PRICING STRUCTUREPRICES SUBJECT TO CHANGE FEBRUARY 1993

ITEM: (See below for detail description) PUBLIC AGENCY/ PRIVATE FIRMPROJECT /PROJECT

15 USER SITE SOFTWARE LICENSE $5,000.00 $7,000.00(Executable Only)

2 YR UPGRADE RIGHTS AND HOT LINE $2,500.00 $3,000.00SUPPORT

INITIAL SET UP AND TRAINING FEE $2,500.00 $2,500.00

START-UP PACKAGE TOTAL 10,000.00 12,500.00

TRAINING (ON OR OFF-SITE) - 8 HOURS $2,000.00 $2,000.00UP TO 10 USERS1

CUSTOM REPORTS Hourly @$120.00 Hourly @$120.00

CUSTOM CODING (SCREENS OR Hourly @$120.00 Hourly @$120.00OPERATION)

DATA CONVERSION Hourly @$120.00 Hourly @$120.00

ADDITIONAL 10 USER LICENSE $1,000.00 $1,500.00

LIMITED SOFTWARE LICENSE (Code) $50,000.00 $60,000.00

Exclusive of travel and expenses for on-site training

Computer System SalesBring Needed Cash to Citym Finances; lnglewood’sinfornmdon czar hascombined technicalknow-how with a grasp ofmunicipalities’ needs toraise a new source of cash.

By M [C~t EI.E FUETSCI [TIMES STAFF WRITER

Privatization may 13e today’s hottrend in ~orne cities, as municipalofficials look for ways to cut costsamid withering economic condl-tions.

Inglewood, though, is pioneering"publicization," says a jovial JamesNyman, the city’s computer czar.

Nyman has reason to be cheerfulthis wcck. His ingenuity with com-~)uter systems and his familiaritywith municipal government--hc’sa councibnan in Palos Vcrdestares--has produced two new con-tracts for Inglewood’s informationsystems department, which nowboasts annual sales of more than$I mii|ion.

That has put Inglewood hcad-to-hcad in the marketplace withthe major private firm in the samebusiness, Lockheed IMS. a subsidi-ary of Lockheed Corp., the giantaircraft and dcfcnsc contractor.

The Sacramento City CouncilMonday chose lnglcwood overLockheed to supply the hardwarethe systems and t.hc training fro’the computerized handling andcollection of traffic citations, espe-cially delinquelll, ones

I’hH~ ;~}llt} IS wortl~ $:JO0,O00, oi

wo)(:n ~’l;),OtiO will profit[}tIIIlI)CO IIILO [nglcwood’s general

"Scmet.imes government can dothings well," says James Ny-.man, whose systems competewith those of private industry.

fund annually for the next threeyears.

Also this week, the city of SouthPasadena decided to drop Lock-heed and coutract with lnglewoodto handle its processing of trafficcitations.

"We’re now the second-largestprocessor [of traffic citations] inthe state of California," Nymansakl. Lockheed is tile first.

Nyman added: "To me, the storyis that sometimes governmellt calldo I hings well."

In the South Bay. Inglewood ishandling me u’affic citation pro-cess fOl" I.ho cities of ’[~orral/ce,

Pleas,, see COMPUTERS, B.5

~OMPUTERS: Inglewood Sells Systems to Other Cities~2ontini~ed from !!3La, wndale Hawthorne and PalosVe~des¯ In addition, Inglewood has de-veloped systems that process utili-ty billing and collection. The city ofFresno bought that system. And,abOut 30,cities in Los AngelesCounty have bought another In-gtewo0d-designed and servicedsyatem that makes changes direct-l:~.,onto the county assessor’s prop-erl,y tax rolls.:~.i~The.. assessor loves it," saidInglewood City Manager Paul D:F_~kles, explaining that the asses-8o~;:s office is practically beggingcities to buy the service because itmakes the ,assessor’s. job so mucheasier.

Cities can tap directly into theassessor’s tax rolls and add the¯ }}ilue of improvements tO a build-ibmor make the nece~sary changes~il a building is built on a vacant¯ kll~. The’ mor~ up-to-date the as-sessor’s rolls, the more quickly thecities realize new tax revenues.

What makes Inglew0od the bestbuy for such services, Nyman said,13, that }ae’s a city councilman andfoflner.,llnay0r himself, ~nd those~orking, with him are city employ-eel’. Everybody involved, he said,t~ up-t’o.~date on what problemsfaq’g eiti¢~ ~th~l how new federal ands~’,ate legis!,ation affects the munici-palities. " "

More important, Nyman says, isthat Iaglewood, not a wealthy cityitself, is keenly aware of how

¯ important revenue flow is to everycity.

"Lawndale, before they joinedus. had never realized more than$168,t300 a year" on traffic cita-tions, Nyman said. "Without writ-ing one additional ticket, in thefirst year with us they recovered$393,000."

Because collection rates on traf-fic citations are notoriously poor,

’ Nyman said, South Bay cities col-lect an average of $15 for everyticket they write. Ing!ewood canoffer cities an average collection of$25 for every ticket th, ey write, hesays.

"I made $2.5 million last year Inparking citations" for. Inglewood,Nyman said. "Our focus is neces-sarily always on creative waysraise more money."

What is spurring Inglewood’sdrive to win parking citation con-

tracts, along with Lockheed’s pushto do the samo, is a change in statelaw that takes effect in January.Historically, municipal courts pro-cessed traffic tickets and collectedthe fines. The state, however,doesn’t want courts doing thechore anymore.

"All the cities," Nyman said.must "find a new way I,o processtheir parking tickets, because thecourts can’t."

Inglcwood. though, took overthat job from its court more than adecade ago, and Nyman alreadyhad a system in place.

Additionally, local governmentsare now so desperate for revenuesthat they are casting about forbetter collection systems for finesthey levy, and the state has madechanges that oblige them.

For example, last year the stateadopted legislation allowing citiesto tap into computerized state in-come tax records in order to collecton unpaid traffic tickets. Inglewood

was the first city to do so, a movethat netted another $60,000 in col-lections.

Nyman and his team are one ofthe most valuable assets the city ofInglewood has, said Eck!cs, thecity manager. The city, he added, iseven talking now about setting upsome sort of nonprofit corporationto sell the systems Nyman and his

INTEROFFICEMEMORANDUM

DATE:

TO:

FROM:

SUBJECT:

October 15, 1993

RodDawson . . ~)

Jeffrey C. Christiansen ~- FILE: PM310

Special Project Proposal~ Sale of the RCC ChangeControl System (CCS~

Based on the continuing inquiries received from other transit agencies andconstruction management firms regarding the availability of the CCSTM developedby RCC, staff has prepared the attached proposal for marketing and sale of theprogram.

Currently, there are about six agencies or companies who have demonstratedinterest (unsolicited) in possible purchase of the system - in fact, the OrangeCounty Transportation Corridor Agency just called today. Legal counsel has beenconsulted and do not find any legal impediments to sale of the program. Staffwould like immediate approval to proceed with contacting and arranging sale ofthe program with those agencies who have already contacted us.

Additionally, I would like to immediately pursue the possiblity of adding atechnical position to the RCC Program Management team that would be dedicatedto support of the RCC PMIS systems including the CCSTM , the CMS, theplanned EIS, and other information systems critical to successful projectmanagement.

Contact Louisa Simpson if you have questions about the attached proposal,

235

SPECIAL PROJECT PROPOSAL

MARKETING THE MTA CHANGE CONTROL SYSTEM (CCSTM)

PROPOSAL:

Establish a special project for the period of one year to initiate in-house marketing and sales of the MTAdeveloped CCSTM (Change Control System) software. Research, recommend, and initiate alternatemarketing strategies.

PROJECT OBJECTIVES:

Gain recognition as the standard of excellence in rail construction as the leader in development ofcontract change control and construction management support systems.

Provide revenue to recover system development costs, and support ongoing maintenance of thecurrent MTA CCSTM and other RCC information systems; thereby reducing impact on RCCproject budgets.

Provide state-of-the-art system upgrades that directly benefit the MTA CCSTM users and projectsat an accelerated schedule with minimum cost to project funding resources.

Establish lead position in establishing industry standards in the contract change process consistentwith, and supportive of, public funding agency requirements.

Provide professional growth and expansion opportunities to MTA staff consistent with the specialproject concept.

CRITICAL SUCCESS FACTORS:

NO AFFECT ON OR REDUCTION OF CONFIGURATION MANAGEMENT SUPPORT OFRCC PROJECTS.

IMPROVED SPEED OF RELEASE OF RCC CCSTM USER REQUESTED ENHANCEMENTSAND ADDITIONAL SYSTEM MODULES.

MINIMUM OF 5 CCSTM PACKAGE SALES OR $60,000 IN REVENUES DURING THEINITIAL PROJECT PERIOD.

¯ DEMONSTRATED ABILITY TO SUPPORT CUSTOMERS.

II. BACKGROUND:

The MTA CCSTM was originally released in August of 1991 and has been consistently and successfullyused over the last two years to track and document over 5,000 changes to construction and consultantcontracts. The system has established its credibility in the MTA community and has received favorable

SPECIAL PROJECT PROPOSALCCSTM MARKETING

reviews from our principal funding agencies as well as virtually all auditing activities. Notably, auditorshave cited an marked improvement in the quality of change documentation produced, and system usershave reported significant time savings in document preparation.

It has become apparent that the CCSTM system is a real world management tool that fills a genuineconstruction industry need. During the last year, unsolicited interest has surfaced from other publicagencies and contractors who are participants in capital construction projects. Principal among these isthe Dallas DART project who have installed CCSTM as a primary change management and reportingsystem. Other agencies that have expressed an interest based on word-of-mouth recommendations includethe construction manager for the Orange County John Wayne Airport, the Orange County TransitCorridor Agency, Dallas Texas Airport, the Los Angeles Metropolitan Water District, the SacramentoArea Transit District, and BART.

Based on this increasing level of interest and an analysis of potentially competing commercial softwarepackages it has been determined that it is desirable to endeavor to recover the LACMTA developmentcosts for the CCSTM system and to pay for ongoing maintenance and future enhancements by offeringCCSTM licenses to prospective buyers.

Legal counsel has been consulted and have not found any legal obstacles to MTA marketing and sale ofthe CCSTM product. Copyright registration of the software and CCSTM trademark is underway. Legalcounsel are drafting a license agreement which will minimize MTA liability and safeguard ownership ofthe software, but need to know the approved marketing approach before final drafting.

III. BUDGET IMPACT

The CCSTM marketing effort is designed to bring in revenues that would be used to further automatedinformation system development for the MTA rail construction and operations support.

Of the three staff positions recommended, two are already included in the RCC Program Managementbudget. The additional staff position would be funded by a budget transfer from MIS.

A cost center within the RCC Program Management budget would be established to track revenue andexpenses for the project. Revenue would be generated from initial license sales, maintenance agreements,modifications to satisfy customer unique requirements, training and installation support (billing by thehour), and resale of major product upgrades. Revenues would be collected under the cost center and usedto reimburse the staffing budget.

Based on the interest expressed to date and the proposed pricing plan (attachment 1), initial annualrevenue is expected to be in the $50,000 to $200,000 range. If successful, the project will becomeentirely self-funding.

IV. PROJECT PLAN

A. PROJECT APPROACH

1. Marketing Approach

10/15/93 -2-

SPECIAL PROJECT PROPOSALCCSTM MARKETING

Staff will use a mid-level marketing approach consisting of preparation of basicmarketing materials (brochure, demonstration disk, cover letters, etc.). Materials willbe mailed to all major public agencies currently involved in publicly funded majorconstruction projects. Mailings will be followed up by phone calls. Where interestis indicated, sales can begin in earnest by arranging demonstrations and obtainingcommitments.

2. Technical Support

RCC planned upgrades will be given first priority. Development of multiple versionsof the program will be avoided wherever possible by integrating custom requests byCCSTM customers into the existing program Work will be performed at the homeoffice and transmitted to the customer via modem whenever possible (thus reducingcustomer costs and mitigating any disruption to direct RCC program support).

Based on our DART experience and discussions with other potential customers,custom enhancements are expected to involve flexibility in terminology on reports andscreens, which can be accomplished by established user defined reference tables ratherthan being "hard-wired" into the program. It is also anticipated that customerrequests will often coincide with in-house plans and needs (most projects have similarinformation requirements).

Technical Support Offered:

Technical support will be offered at a proposed rate of $120 per hour. Any travel andexpenses to be paid by the customer. Support will include the following:

[]

[]

[]

[]

Phone Support (included in purchase: single point of contact with eachcustomer)

Existing data conversion

Custom enhancements (to be integrated with base CCSTM wherever possible)

Custom Reports

Integration with other systems (export/import)

3. Pricing and Sales

The CCSTM proposed pricing plan is well below that of commercial competitors.Pricing is intended to provide other public agencies with the benefit of our experiencein creating the CCSTM at a lower-than-market price while still maintaining sufficientrevenue to offset original development and ongoing maintenance costs.

As a point of comparison, the closest commercially available product, ExpeditionTM -a Primavera product - is priced at about $5,000 for a 3 user system*. Training istypically $1,000 per person. A price comparison based on proposed CCSTM pricingfor a 15 user system (support for approximately 5 contracts) is as follows:

10/15/93 -3-

SPECIAL PROJECT PROPOSALCCSTM MARKETING

Item CCSTM cost Ext~edition Cost

Software $7,000 $25,000Training $3,000 $15,000

Total Base Price: $10,000 $35,000

* Note: The CCSTM system currently has about 200 users within the RCC projects alone.Cost of installing and training on Expedition for this size of user base would have run wellover $500,000.00.

Project Staffing

Primary staff support would be provided by existing RCC Program ManagementConfiguration staff. No more than 25% of total existing configuration managementstaff time would be dedicated to the CCSTM marketing effort (part-time for 3 of positions). In addition to the existing staff it is critical that a seniorprogrammer/analyst position be either added to staff to provide dedicated systemsupport for the project.

L. Simpson CCSTM 15%ProjectManager

General project oversight and management;system analysis, custom reporting and trainingas contracted.

D. Partridge CCSTM 25%MarketingManager

Manage marketing efforts. Training and customreporting as contracted. (Upgrade from LevelH to Level I for project duration).

New MIS Position CCSTM 80%SeniorProgrammer/Analyst

Support all MTA planned and requested CCSTM

upgrades. Support all contracted upgrades forcustomers. Remaining 20% of time in supportof other existing RCC PMIS (ProjectManagement Information System) modules.

Staff time would be funded from existing RCC Program Management budget, to bepartially or entirely reimbursed from project revenues depending on revenuesreceived.

STAFFING ISSUES

Qualifications:

For the initial marketing, sale, and support period it is critical that staff be assignedwho are familiar with both the CCSTM system software and the functional needs of a

comprehensive change management program. Use of existing staff will eliminate anylearning curve time loss in the initial marketing period and will ensure the fastestresponse to customer inquiries and enhancement requests.

10/15/93 -4-

SPECIAL PRO~ECT PROPOSALCCSTM MARKETING

Incentive Program

The assigned staff must be dedicated to project success - our reputation is at stake.All proposed staff are on a salaried basis and success of this project is likely toinvolve a significant amount of unpaid overtime. The incentive program outlinedbelow is intended as an incentive to reach project goals in a limited time period, andas a reward for excellence and cost-saving innovation.

PROPOSED INCENTIVE PROGRAM..

Once the initial goal of recovery of initial CCSTM development costs has beenachieved (set at $250,000) earmark 10% of further revenues for incentive bonuses be distributed quarterly as follows: (I’he example is based on $100,000 in revenuesover the stated goal, of which $10,000 would be distributed as an incentive bonus.)

Position Percent Example

Project Manager 25% $2,500

Marketing Manager 25% $2,500

Sr. Programmer/Analyst 50% $5,000

PROJECT TASKS AND SCHEDULE:

Immediately pursue product demonstration and sales to those organizations which havealready expressed an interest in the CCSTM system.

a. Develop product and services brochure and pricing proposal.

b. Develop limited use demonstration diskette.

c. Mail diskette and follow-up with phone contacts.

NOTE: DART has budgeted $100,000 for CCSTM custom enhancements andhas expressed interest in and MTA maintenance agreement to support customenhancements. Both the John Wayne airport and Sacrament Rail lines are in start-up,but need to put a system in place this fall. It is important that we "strike while theiron is hot" with these agencies.

Contact MTA finance to coordinate project number and accounting set-up forrevenues.

Prepare and process a RCC/LACMTA Advisory Board Report informing the boardsof the nature, objectives, and general scope of the project.

10/15/93 -5-

SPECIAL PROIECT PROPOSALCCSTM MARKETING

Obtain the following delegation of authority to allow Program Management staff toenter into CCSTM limited license agreements with other agencies:

Vice-President, RCC Program Management: Up to $25,000Manager, RCC Configuration Management: Up to $15,000

5. Obtain approval for the temporary staff position upgrades.

Authorize a new position within RCC Program Management dedicated to systemsupport (senior programmer/analyst).

7. Update CCSTM Users Manual and/or complete on-line help function.

Continue with RCC planned system enhancements; incorporate custom requests ascontracted.Modify the CCSTM system to develop industry generic versions.

Assess integration of other RCC developed programs such as the Cost ManagementSystem (CMS) into the sales package.

10. Research, examine, and recommend alternative future marketing approaches. Goahead decisions to be made at the end of the project period.

MARKETING OPTIONS TO BE EVALUATED:

Sell the system rights to an existing, established software firm for bothmarketing and support; retaining an agreed royalty stream

be Provide either source code or executable copies of the program (retaining therights) to other public agencies free of charge

Subcontract to a marketing consultant or possibly several consultants for salesonly, retaining source code and maintenance responsibility

Undertake the full marketing approach in-house (i.e, continue with CCSTM

special project at increased or continued level of effort (dependent on firstyear results).

Development in-house capability to act as a management consultant to otheragencies - including the sale and installation of our PMIS systems.

RISK ANALYSIS CONDUCTED

A. Market Need and Competition

It has become apparent that the state-of-the-art CCSTM system is a real world

10/15/93 -6-

SPECIAL PROJECT PROPOSALCCSTM MARKETING

management tool that is well beyond what is readily available in commerciallymarketed software packages. The CCS~ system is unique as it covers every aspectof the change, claims and submittal tracking processes throughout all project phases -from design to system operations. The system also runs in standard networkenvironments and supports appropriate distribution of authority and workload whileproviding and excellent tool for management oversight. Unlike most status trackingsystems, CCSrM actually generates all required forms and documentation in additionto creating the normal historical reporting database.

In addition to the unique features of the CCSr~ application, the technical platformused makes the system extra "user-friendly". Unlike other systems reviewed, CCSrM

stores data in standard "dbf" format, making the data highly compatible with all majorPC based spreadsheet and database packages currently in general use. The reports arecreated and maintained using a standard "off-the-shelf" menu driven report generator,making the reporting function extremely flexible.

The competition is limited to two systems that cater to the individual contractorenvironment. No systems currently support multiple funding sources, claims, andnumerous other factors that are a standard part of the business. Pricing for thesesystems will be higher and give no discount rate to government agencies. CCSr~ is afar more sophisticated system that will bring control and consistency to changedocumentation. All consultants (from many companies) and reviewers of CCSr~

have stated that it is by far the best system they have seen (some of these haveexperience with competing systems and various home developed company systems).

B. LIABILITY ISSUES

Meetings have been conducted with County, LACMTA, and subcontracted specialistcounsel to determine the legality of this proposal and the protection required for theproduct. Counsel advised:

1) It is not a violation of law for the LACMTA to undertake this enterpriseproviding its purpose is to generate revenue to support and/or enhanceLACMTA systems.

Board approval should be ultimately obtained, however, if sales such as theDallas DART upgrade are in jeopardy we should proceed with the sale andBoard Report concurrently.

3) Counsel agreed to proceed with the task of registering the CCSru logo as atrademark.

Legal counsel are drafting a license agreement which will eliminate MTAliability and safeguard ownership of the project, but need to know theapproved marketing approach before final drafting.