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IFTWG OverviewProject Selection and Cost Benefit Analysis
Michael P. Onder, Team LeaderOffice of Freight Management and OperationsUSDOT-FHWA
CVFM PresentationAugust 31, 2005
IFTWGIFTWGIntermodal Freight Technology Working Group
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IFTWG Historical Summary:
IFTWGIFTWGIntermodal Freight Technology Working Group
IFTWGIFTWGIntermodal Freight Technology Working Group
1998
Formed by joint recommendationIndustry, government, military, vendors
1999 2004 2005
Chartered to address consensus needsBased on operational/ process analysis
Met regularly• 2-3 times/year w/ITS America• Communicated program/ project
information• Formulated, planned, reviewed project
results
Identified/sponsored pilot demonstrations
• Injected technology into business practices
• Formulated to facilitate technical/operational evaluation
• “Business case” analysis incorporated for sustainability analysis
2003
Meetings• Two Annual meetings to coincide with
IANA meeting • Intercessional Web Cast • Outreach to CHCP
Project Planning Process• Revamped to expand industry
participation • Introduced Working Group Project
Vetting Process• Selection Process implemented • Introduced Analysis Tools focused
on Business Process and Cost Benefit Analysis
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Working Group Philosophy:The IFTWG is a Forum:
• For key members of the stakeholder community to collaborate across organizational and institutional boundaries
• For identifying, vetting, analyzing, and evaluating technological / procedural solutions to challenges within the intermodal freight transportation community
• For promoting the application and adoption of technology to improve freight movement
IFTWGIFTWGIntermodal Freight Technology Working Group
IFTWGIFTWGIntermodal Freight Technology Working Group
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Stakeholders:• Industry
– Members: Union Pacific Railroad, American Presidents Line, Hanjin Shipping, Norfolk Southern Railroad, Landstar, Limited Brands
– Roles: Real-world test bed, project champions, assets
• Government– Members: FHWA, TSA, RITA, CBP, Joint Program Office
ITS– Roles: Facilitation, reduction/removal of barriers to
collaboration
• Vendors– Members: Trac Lease, TTX, The Greenbrier Companies,
QUALCOMM INC., Embarcadero Systems Corporation, Optimization Alternatives
– Roles: Practical, responsive evaluation-ready solutions
IFTWGIFTWGIntermodal Freight Technology Working Group
IFTWGIFTWGIntermodal Freight Technology Working Group
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Methods and Tools:
• Open discussions– Sharing of concerns and priorities– Exchange of ideas
• Transparent operations– Documented meetings– Open access to leaders– Project Selection Process
• Rigorous analysis– Project selection and feasibility
methodologies– Evaluation of results
IFTWGIFTWGIntermodal Freight Technology Working Group
IFTWGIFTWGIntermodal Freight Technology Working Group
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Performance Metrics (Rate the technology against the performance metrics list generated by the CBM Tool)
Benefit/Cost (1) Input technology costs, life, benefits, & “As Is” cost drivers
(2) Input benefits of the technology, and “To Be” cost
drivers
Performance Measures(Industry Standard Performance
Metrics aligned with business processes)
Cost Drivers(Generate a list of cost
drivers based on defined business process map)
Final Output(1) Qualitative Performance Score: Reliability , Responsiveness, Flexibility, Assets, Safety, &
Security(2) Quantitative Financial output: Net Present
Value, Internal Rate of Return, Payback Period, and Benefit Cost Ratio
Technology Selection(Select a technology to
rate/evaluate)
Business Process Mapping(Define your Business
Processes)Qualitative Analysis
Technology Evaluator (User)
Expert Panel
Quantitative Analysis
Project Selection
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IFTWG Analysis Tools
Business Process Mapping
Performance Metrics (Rate the technology against the performance metrics list generated by the CBM Tool)
Benefit/Cost (1) Input technology costs, life, benefits, & “As Is” cost drivers
(2) Input benefits of the technology, and “To Be” cost
drivers
Performance Measures(Industry Standard Performance
Metrics aligned with business processes)
Cost Drivers(Generate a list of cost
drivers based on defined business process map)
Final Output(1) Qualitative Performance Score: Reliability , Responsiveness, Flexibility, Assets, Safety, &
Security(2) Quantitative Financial output: Net Present
Value, Internal Rate of Return, Payback Period, and Benefit Cost Ratio
Technology Selection(Select a technology to
rate/evaluate)
Business Process Mapping(Define your Business
Processes)Qualitative Analysis
Technology Evaluator (User)
Expert Panel
Quantitative Analysis
• “AS IS” Business Processes captured in the supply chain relative to the identified project
• Business Process Maps include:– Supply Chain Phase (Shipment, Transport, Delivery)
– Organization/Party Performing the Work
– Information Flows of data
– Physical Flows of freight moving
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Shipment Preparation (SP)
Data Element/StandardProcess VariationPhysical Process
3. Shipment Request
SP to FF
3. Shipment Request
SP to FF
6. Pre-alert
FF to IA
6. Pre-alert
FF to IA
8. Shipping Marks and
Packing List
SP to various
8. Shipping Marks and
Packing List
SP to various
7. IA assigns Unique Tracking #, begins inbound shipment
scheduling
7. IA assigns Unique Tracking #, begins inbound shipment
scheduling
11. SP prepares consignment endorsement, sends to MC
11. SP prepares consignment endorsement, sends to MC
4. CA delays export clearance
to FF
4. CA delays export clearance
to FF
15. FF books air carriage with AC
15. FF books air carriage with AC
Nex t S
hee t
Lin
k #1 : Tru
c k –to
-Air (S
egm
en
t 2)
0.00 08:45
1.25 10:00
5.75 14:30
7.75 16:30
-1.25 hrs. 1.25 hrs. 4.5 hrs. 2.0 hrs. 1.50 hrs. 12.75 hrs.1.0 hrs. 2.00 hrs.1.75 hrs.
8.75 17:30
10.25 19:00
23.00 07:45
24.75 09:30
26.75 11:30
27.50 12:15
Information FlowTime
TechnologyLink 1: Truck-to-Air (Segment 1) B Buyer SP Supplier FF Freight Forwarder SL Seller
AC Air Carrier CA Customs Authority MC Motor Carrier
Internet E-mail
Internet E-mail FacsimileFacsimile
**U.S. Only****U.S. Only**
Key: FF unique identifier
Key: FF unique identifier
InternetInternet FacsimileFacsimile
Unique Tracking # =
U.S. “Customs Entry Number.
Unique Tracking # =
U.S. “Customs Entry Number.
E-mail/Structured
Electronic
E-mail/Structured
Electronic
Paper, Structured
Electonic, E-mail
Paper, Structured
Electonic, E-mail
AC, MC destination booking may be completed after
consignment departs facility
AC, MC destination booking may be completed after
consignment departs facility
FF not using pre-
existing capacity
purchased with AC
FF not using pre-
existing capacity
purchased with AC
Supply Chain:Eyewear
NE U.S.A-Italy (Eastward)
Process Handoffs: 4 Total Information Exchanges: 18Process Duration: 56.50 hrs.Link Duration: 36.25 hrs.Segment Duration: 27.50 hrs.Customs Requirements: U.S., ItalyExit Port: John F. Kennedy, NY (JFK)Entry Port: Milan Linate, Italy (LIN)
Supply Chain Process Analysis and Technology Research Map
Trigger
Handoff
Overnight Staging
Telephone, Structured
Electonic, E-mail
Telephone, Structured
Electonic, E-mail
Paper, Structured
Electonic, E-mail
Paper, Structured
Electonic, E-mail
Paper, Structured Electonic,
Paper, Structured Electonic,
Paper, Structured Electonic,
Paper, Structured Electonic,
13. MC prepares
consignment bill of lading
13. MC prepares
consignment bill of lading
2. FF receives shipment request
2. FF receives shipment request
6. FF starts
shipment schedule
6. FF starts
shipment schedule
8. SP prepares shipping marks and packing list
8. SP prepares shipping marks and packing list
12. SP creates manifest
12. SP creates manifest
H
1. SP receives SL’s order
alert, prepares shipment
request to FF
1. SP receives SL’s order
alert, prepares shipment
request to FF
5. CA issues export clearance
to FF
5. CA issues export clearance
to FF
T
3. FF starts export clearance,
enters CA system
3. FF starts export clearance,
enters CA system
T
10. MC schedules outbound,
inbound pickup
10. MC schedules outbound,
inbound pickup
T
9. FF schedules pickups with MC, CS, AC
9. FF schedules pickups with MC, CS, AC
14. SP seals and locks container
14. SP seals and locks container
7. Unique Tracking #
IA to various
7. Unique Tracking #
IA to various1. Order Placed
B to SL
1. Order Placed
B to SL
2. Alert of Order
SL to SP
2. Alert of Order
SL to SP
9. Outbound Pickup Booking, Air
Facility Inbound Pickup Booking,
Consolidation Inbound Booking
FF to MC, AC, CS
9. Outbound Pickup Booking, Air
Facility Inbound Pickup Booking,
Consolidation Inbound Booking
FF to MC, AC, CS
4. AES Shipment Entry
FF to CA
4. AES Shipment Entry
FF to CA
5. Export Clearance
CA to FF
5. Export Clearance
CA to FF11.
Consignment Endorsement
SP to MC
11. Consignment Endorsement
SP to MC
10. Manifest
SP to various
10. Manifest
SP to various12. Bill of
Lading
MC to various
12. Bill of Lading
MC to various
13. Air Carriage Booking
FF to AC
13. Air Carriage Booking
FF to AC
T
0.75 hrs.
Hrs. Elapsed EST
H
OS
T
OS
OS
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IFTWG Analysis Tools
Cost Benefit Methodology
“AS IS” Metrics
• Qualitative – Industry Standard Performance Metrics Linked to each Business Process
• Quantitative – Cost Drivers Assigned to each Business Process– Examples:
• Time to perform the task (Transport Time, Order to Delivery)
• Number of Occurrences (Shipments, Orders)
Performance Metrics (Rate the technology against the performance metrics list generated by the CBM Tool)
Benefit/Cost (1) Input technology costs, life, benefits, & “As Is” cost drivers
(2) Input benefits of the technology, and “To Be” cost
drivers
Performance Measures(Industry Standard Performance
Metrics aligned with business processes)
Cost Drivers(Generate a list of cost
drivers based on defined business process map)
Final Output(1) Qualitative Performance Score: Reliability , Responsiveness, Flexibility, Assets, Safety, &
Security(2) Quantitative Financial output: Net Present
Value, Internal Rate of Return, Payback Period, and Benefit Cost Ratio
Technology Selection(Select a technology to
rate/evaluate)
Business Process Mapping(Define your Business
Processes)Qualitative Analysis
Technology Evaluator (User)
Expert Panel
Quantitative Analysis
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Cost Benefit Methodology “AS IS” MetricsQualitative Performance Measure
Qualitative Performance
Measure Selected
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Cost Benefit Methodology “AS IS” Metrics
Processes Selected
Processes Selected and Associated with
Qualitative Performance Measure
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Cost Benefit Methodology “AS IS” MetricsQuantitative Cost Drivers
Quantitative Cost Driver associated with
Business Process
“AS IS” Value of Cost Driver
Captured
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IFTWG Analysis Tools
Cost Benefit Methodology
“TO BE” Design
• Expert Panel Evaluation of “TO BE” Project with Technology Deployed– Inputs Performance Metric Improvements– Inputs Cost Driver Improvements
• User Inputs into CBM Tool– Total Cost of the Project– Cost of Capital– Planned Life of the Project
Performance Metrics (Rate the technology against the performance metrics list generated by the CBM Tool)
Benefit/Cost (1) Input technology costs, life, benefits, & “As Is” cost drivers
(2) Input benefits of the technology, and “To Be” cost
drivers
Performance Measures(Industry Standard Performance
Metrics aligned with business processes)
Cost Drivers(Generate a list of cost
drivers based on defined business process map)
Final Output(1) Qualitative Performance Score: Reliability , Responsiveness, Flexibility, Assets, Safety, &
Security(2) Quantitative Financial output: Net Present
Value, Internal Rate of Return, Payback Period, and Benefit Cost Ratio
Technology Selection(Select a technology to
rate/evaluate)
Business Process Mapping(Define your Business
Processes)Qualitative Analysis
Technology Evaluator (User)
Expert Panel
Quantitative Analysis
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Cost Benefit Methodology “TO BE” Design
Qualitative Performance Measure
Potential Technology Rated by Qualitative Performance Measure
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Cost Benefit Methodology “TO BE” Design Quantitative Cost Drivers
Cost Driver Improvements for each Technology
Selected
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IFTWG Analysis Tools
Cost Benefit MethodologyFinal Output
• Qualitative Performance Score– Categories: Reliability, Responsiveness, Flexibility, Assets,
Safety, Security– Score given as a total and an average
• Quantitative Results– Net Present Value– Internal Rate of Return– Payback Period– Benefit Cost Ratio
Performance Metrics (Rate the technology against the performance metrics list generated by the CBM Tool)
Benefit/Cost (1) Input technology costs, life, benefits, & “As Is” cost drivers
(2) Input benefits of the technology, and “To Be” cost
drivers
Performance Measures(Industry Standard Performance
Metrics aligned with business processes)
Cost Drivers(Generate a list of cost
drivers based on defined business process map)
Final Output(1) Qualitative Performance Score: Reliability , Responsiveness, Flexibility, Assets, Safety, &
Security(2) Quantitative Financial output: Net Present
Value, Internal Rate of Return, Payback Period, and Benefit Cost Ratio
Technology Selection(Select a technology to
rate/evaluate)
Business Process Mapping(Define your Business
Processes)Qualitative Analysis
Technology Evaluator (User)
Expert Panel
Quantitative Analysis
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Cost Benefit Methodology Final Output
Quantitative Results
Qualitative Results
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Performance Metrics (Rate the technology against the performance metrics list generated by the CBM Tool)
Benefit/Cost (1) Input technology costs, life, benefits, & “As Is” cost drivers
(2) Input benefits of the technology, and “To Be” cost
drivers
Performance Measures(Industry Standard Performance
Metrics aligned with business processes)
Cost Drivers(Generate a list of cost
drivers based on defined business process map)
Final Output(1) Qualitative Performance Score: Reliability , Responsiveness, Flexibility, Assets, Safety, &
Security(2) Quantitative Financial output: Net Present
Value, Internal Rate of Return, Payback Period, and Benefit Cost Ratio
Technology Selection(Select a technology to
rate/evaluate)
Business Process Mapping(Define your Business
Processes)Qualitative Analysis
Technology Evaluator (User)
Expert Panel
Quantitative Analysis
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Summary:
• IFTWG members proposed 8 projects from the annual meeting in San Antonio in 2004– Six from industry, One from Government, One from the
consultant community• Selection Process rendered Two Top Projects in 2005–
from industry stakeholders.• Chicago Cross Town Improvement Project
– Potential Partners include: Class One Railroads, Drayage Companies, TSA, FHWA, FRA
• Terminal Optimization Project– Potential Partners include: Drayage Companies, Ports, Railroads,
CHCP, MARAD
• Projects to be presented to USDOT as either exploratory or stand alone Tier II Projects when CBM Analysis is complete
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The End
Please write or call:
Michael P. Onder,
E-mail: [email protected]
Telephone: 202-366-2639
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