[Federal Register Volume 74, Number 174 (Thursday, September 10, 2009)]
[Proposed Rules]
[Pages 46515-46521]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-21849]


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DEPARTMENT OF TRANSPORTATION

Federal Transit Administration

49 CFR Part 633

[Docket No.: FTA-2009-0030]
RIN 2132-AA92


Capital Project Management

AGENCY: Federal Transit Administration (FTA), DOT.

ACTION: Advance notice of proposed rulemaking; request for comments.

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SUMMARY: In an effort toward greater transparency and to ensure 
integrity in public investments, FTA today publishes an advance notice 
of proposed rulemaking on capital project management. The Federal 
Transit Administration (FTA) is considering a revision of its Project 
Management Oversight (PMO) rule, shifting its focus from project 
oversight only to project management and oversight. A revised Part 
would more clearly identify necessary project management skills needed 
to be demonstrated by project sponsors for all fixed guideway capital 
projects, as well as additional requirements that would apply only to 
the more complex major capital projects, and distinguish project 
characteristics that would require documentation of project plans and 
implementation strategies in a project management plan, as well as the 
use of FTA's Project Management Oversight Contractors (PMOCs). 
Beginning the rulemaking process to update its project management rule 
will aid some key agency priorities. It will help ensure integrity and 
accountability in its construction grant programs, and it will provide 
data the agency can use in its efforts to streamline its discretionary 
capital project approval process. FTA seeks to elicit a broad array of 
comments from project sponsors, the industry, other stakeholders, and 
the public on a number of subjects.

DATES: Comments must be received by November 9, 2009. Late-filed 
comments will be considered to the extent practicable.

ADDRESSES: You may submit comments identified by the docket number 
(FTA-2009-0030) by any of the following methods:
    Federal eRulemaking Portal: Go to www.regulations.gov. Follow the 
online instructions for submitting comments.
    U.S. Mail: U.S. Department of Transportation, Docket Operations, 
West Building, Room W12-140, 1200 New Jersey Avenue, SE., Washington, 
DC 20590.
    Hand Delivery: U.S. Department of Transportation, Docket 
Operations, West Building, Room W12-140, 1200 New Jersey Avenue, SE., 
Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, 
except Federal holidays.
    Fax: (202) 493-2251.
    Instructions: You must include the agency name (Federal Transit 
Administration), and docket number (FTA-2009-0030) or Regulatory 
Identification Number (RIN 2132-AA92) for this rulemaking at the 
beginning of your comments. All comments received will be posted, 
without change and including any personal information provided, to 
www.regulations.gov and http://dms.dot.gov, where they will be 
available to internet users. Please see the Privacy Act.
    You should submit two copies of your comments if you submit them by 
mail. If you wish to receive confirmation that FTA received your 
comments, you must include a self-addressed, stamped postcard. Due to 
security procedures in effect since October 2001 regarding mail 
deliveries, mail received through the U.S. Postal Service may be 
subject to delays. Parties submitting comments should consider using an 
express mail firm to ensure the prompt filing of any submissions not 
filed electronically or by hand.
    For access to the DOT docket to read materials relating to this 
notice, please go to http://dms.dot.gov at any time or the Docket 
Management System.

FOR FURTHER INFORMATION CONTACT: For program questions, please contact 
Aaron C. James, Sr. at (202) 493-0107 or [email protected], or Carlos 
M. Garay at (202) 366-6471 or [email protected]. For legal 
questions, please contact Jayme L. Blakesley at (202) 366-0304 or 
[email protected]. The principal office of FTA is located at 1200 
New Jersey Avenue, SE., Washington, DC 20590. Office hours are from 
8:30 a.m. to 5 p.m., Monday through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION: 

I. Introduction, Background, and Purpose
    A. Introduction
    B. Background
    C. Purpose of This ANPRM
II. Applicability
    A. Fixed Guideway Capital Project
    B. Major Capital Project
    C. Questions
III. Principles and Requirements for Fixed Guideway Capital Projects
    A. Fixed Guideway Capital Projects
    1. Technical Capacity and Capability
    2. Satisfactory Continuing Control
    3. Maintenance of Facilities and Equipment
    4. Financial Plan
    5. Grant Project Description, Budget and Milestones
    B. Major Capital Projects
    1. Technical Capacity and Capability
    2. Project Management Plan (PMP)
    3. Project Implementation
    4. Performance Requirements
    5. Reporting
    6. Exceptions for Past Performance
    C. Questions
IV. FTA Oversight of Fixed Guideway and Major Capital Projects
    A. Fixed Guideway Capital Projects
    B. Major Capital Projects
    1. Roles and Responsibilities
    2. Risk-Informed Project Management Oversight Approach
    C. Questions

I. Introduction, Background, and Purpose

A. Introduction

    In this Advance Notice of Proposed Rulemaking (ANPRM), and to 
ensure integrity in its public investments through transparency and 
accountability, FTA begins the process of revising its Project 
Management Oversight rule at 49 CFR Part 633. The end result would be a 
Project Management rule governing all FTA-funded fixed guideway capital 
projects as well as additional requirements for major capital projects, 
emphasizing a set of standards and principles for sound project 
management. Specifically, FTA seeks to restructure the current Part 633 
to incorporate the best practices in the transit industry with respect 
to reasonable project performance measures. When final, this project 
management rule should articulate the criteria and skills expectations 
necessary to assure a project sponsor's successful implementation of a 
fixed guideway capital project, including a major capital project. The 
new Part 633 also would be updated to reflect

[[Page 46516]]

oversight tools and methodologies that have been developed since the 
original rule went into effect.
    Updating its project management rule at this time will aid FTA as 
it also considers streamlining its discretionary capital construction 
program. FTA seeks to establish methods that help ensure integrity and 
accountability in its capital grant programs before simplifying its 
competitive construction grant programs.
    As a first step in this rulemaking process, and in the spirit of 
openness and transparency, FTA is publishing this ANPRM to get as broad 
input as possible before developing a Notice of Proposed Rulemaking. 
This ANPRM presents ideas and concepts and solicits comments and 
suggestions on FTA's proposed requirements that are meant to help 
ensure that grantees deliver capital projects on time, within budget, 
and with the promised scope, while assuring a quality product and the 
safety and security of the riding public. This ANPRM does not seek to 
alter existing New Starts guidance previously published by FTA but 
instead to enhance engineering and project management aspects of all 
major capital projects. Through this ANPRM FTA seeks to obtain the 
views of its project sponsors, the industry, other stakeholders, and 
the public on a number of subjects related to project management and 
project management oversight.

B. Background

    FTA awards over $10 billion annually for the purchase of all sizes 
and types of public transportation rolling stock, as well as the 
construction, rehabilitation, maintenance, and improvement of public 
transportation facilities and systems throughout the United States. 
Fixed guideway capital projects, including those traditionally defined 
as major capital projects, reflect significant investments by FTA, and 
typically are the largest and most challenging projects sponsored by 
FTA grantees.
    FTA (as the Urban Mass Transit Administration (UMTA)) issued the 
original Project Management Oversight (PMO) rule on September 1, 1989, 
49 CFR Part 633 (54 FR 36708). This rule prescribed the standards 
necessary at that time to carry out the responsibilities of UMTA's 
Project Management Oversight Contractors (PMOCs) program; set forth 
basic requirements for project management plans for major capital 
projects; and implemented section 324 of the Surface Transportation and 
Uniform Relocation Assistance Act of 1987, that permitted UMTA to use 
up to \1/2\ of 1 percent of the funds available in each fiscal year for 
the agency's capital programs for project management oversight of major 
capital projects. At the time the original rule was published, FTA's 
annual program was less than $3 billion, and the PMO program had in 
effect 25 task orders for Project Management Oversight Contractors.
    The basic oversight framework at 49 CFR Part 633 has served the 
agency well, focusing on the assignment of project management oversight 
contractors to major capital projects and requiring project sponsors to 
develop a comprehensive project management plan (PMP) to guide the 
planning and implementation of their major capital projects. The PMPs, 
combined with the PMOC deliverables have been critical to FTA for 
evaluating whether a project sponsor has the technical capacity and 
capability to execute a major capital project, verifying that projects 
proceed within schedule, scope, and budget, and mitigating problems as 
they arise.
    Today, the dollar value of the Federal transit program has tripled, 
and the number of active PMOC task orders has doubled, indicating 
several things. First, there has been a significant increase in local 
decisions to invest in public transportation. Second, there has been a 
proliferation of project sponsors of major capital projects and an 
emerging need for more specific and systematic expectations for the 
industry in executing these types of projects. Third, FTA is 
participating in a larger number of ``mega projects''--projects of a 
total cost of $1,000,000,000 or more--which entail unique challenges to 
the agency as the steward of Federal tax dollars. Further, FTA research 
into the factors contributing to cost escalation in capital projects 
indicates that in many instances cost increases resulted from lack of 
management capabilities or project controls at the sponsor level.
    Given the growth of the program, as well as the increasing number 
of relatively inexperienced transit agencies now seeking to execute 
complex infrastructure construction projects, FTA seeks to broaden the 
scope of its project management rule to include performance 
expectations for project sponsors seeking financial assistance in 
building major capital projects with significant FTA investment.

C. Purpose of This ANPRM

    The purpose of this ANPRM is to provide general information about 
the direction, scope, and content of a possible revision to FTA's 
project management oversight rule contained in Part 633 of its 
regulations, and to seek answers to questions that will help the agency 
make decisions about the appropriate direction to take in its future 
rulemaking. Ultimately, this rulemaking will help improve grantees' 
project delivery success rate by establishing an effective regulatory 
framework for the management of project scope, schedule, cost, and 
quality for all fixed guideway projects. The overriding goals of this 
ANPRM and any subsequent rulemaking are to encourage grantees to apply 
more effective means of project management and for FTA to provide more 
effective oversight to its grantees and guidance to its PMOCs.
    With this ANPRM, FTA seeks comment and suggestions for alternative 
approaches on the specific topics discussed below that may be the 
subject of a proposed and final rule, including its applicability, the 
definition of ``major capital project,'' the technical capacity and 
capability of project sponsors, the use of project management plans, 
requirements for successful implementation of fixed guideway capital 
projects, and FTA's project management oversight process.

II. Applicability

    Anticipating a new project management rule generates several 
questions pertaining to the scope and applicability of the rule--i.e., 
what types of projects or project sponsors should the rule apply to and 
what aspects of project management should be subject to the more rigid 
requirements of a rule. FTA seeks comments on the approach described 
below. This approach would define two categories of projects--fixed 
guideway capital projects and major capital projects--with greater 
oversight being applied to major capital projects. We would apply 
`baseline' competencies/skills requirements to all fixed guideway 
capital projects funded under the discretionary and formula programs at 
49 U.S.C. 5309(b)(1) and (b)(2), based principally on the statutory 
requirements, with some focus on non-statutory areas that agency 
experience has identified as impediments to timely execution of fixed 
guideway grants. More extensive demonstrations of technical skills and 
project management expertise would be required for projects categorized 
as major capital projects under the new regulation.

A. Fixed Guideway Capital Project

    A fixed guideway capital project would include any project funded 
with section 5309(b)(1) or (b)(2) funds. This would include all New 
Starts projects, Small Starts Projects (including Very Small Starts), 
and Fixed Guideway

[[Page 46517]]

Modernization formula projects. However, projects that also fall within 
the category of a major capital project would be subject to the more 
detailed requirements outlined below.
    The fundamental distinction between a fixed guideway capital 
project and a major capital project are complexity, scale, and 
experience of the project sponsor. For example, some grants, despite 
exceeding $100 million, may only be for a single purpose, such as 
running rail and rail ties. Thus, even though this grant may have a 
very large dollar value, the necessary elements of a high risk capital 
project (i.e., interdependent parts, schedules, resources, and 
finances) do not exist. On the other hand, there are circumstances in 
which a series of fixed guideway modernization improvements, which 
individually might be under $100 million, would be managed together as 
a single investment with interdependent parts, thus falling within the 
definition of a major capital project.
    Conversely, another project might qualify as a major capital 
project but be treated simply as a fixed guideway capital project 
because of certain characteristics that indicate lower risk. For 
instance, a small starts project or extension of a small start, 
executed by an experienced grantee, using the same technology and 
veteran in-house staff that had completed a previous project on time 
and on budget would represent a higher probability that it already has 
the requisite management skills to complete the new project on time and 
on budget.
    Regardless of the project specifics, a defined baseline of 
technical skills and products would apply to all fixed guideway capital 
projects, and are discussed in more detail below. In particular, FTA 
seeks comments and suggestions on exactly what baseline products and 
skills demonstration should be applied to all of these projects.

B. Major Capital Project

    A major capital project would include the following types of fixed 
guideway capital projects: (1) New fixed guideway construction or 
extension of an existing fixed guideway at any cost, but for which the 
project sponsor seeks $75 million or more in Section 5309 New Starts 
funds; or (2) fixed guideway construction, reconstruction, 
rehabilitation or modernization with a total project cost of $100 
million or more, using funds under 49 USC section 5309(b), that 
identifies a set of activities and tasks that are interdependent to 
accomplish a specific objective with specific time, cost, and 
performance constraints; or (3) a project that the Administrator finds 
would benefit from the FTA project management oversight program, or 
presents certain characteristics that indicate the project would 
benefit from enhanced project management, engineering, and 
documentation of plans and processes. FTA seeks comment on what 
criteria it should use to determine whether a fixed guideway project 
should also be classified as a major capital project.

C. Questions

    1. Is the distinction between a fixed guideway capital project and 
a major capital project clear enough? Please provide detail about how 
you would define any of the terms differently. Please explain your 
rationale.
    2. Are there other characteristics--for either project category 
above--you believe should be called out? What are they and why?
    3. Should a Project Management rule contain provisions that apply 
to non-fixed guideway capital projects, for example, bus projects under 
section 5309(b)(3)? Should the rule apply to projects above a certain 
dollar threshold only?
    4. Under consideration is an expanded list of circumstances under 
which the Administrator could designate a project a ``major capital 
project'', triggering additional skills demonstration and process 
planning and project implementation documentation. A list of examples 
follows. Please provide your opinion and regarding whether FTA should 
consider the following criteria for designating a project as a major 
capital project:
     The project sponsor has limited experience in design, 
construction, rehabilitation, or modernization of fixed guideways;
     The project sponsor has a history of exceeding project 
budget or schedule targets on other fixed guideway capital projects;
     The project involves acquisition, maintenance, or 
rehabilitation of vehicles or rolling stock that is not routine for the 
sponsor;
     The project is of significant expense or unique complexity 
for the sponsor;
     The success of the project will depend upon the sponsor's 
timely transaction of third-party agreements;
     The project involves new technology, design or 
construction elements that increase risk to the project cost or 
schedule.

III. Principles and Requirements for Fixed Guideway Capital Projects

A. Fixed Guideway Capital Projects

    Following is a description of the existing baseline requirements 
for fixed guideway capital projects and how FTA proposes to modify the 
requirements.
1. Technical Capacity and Capability
    By law, before FTA can award grant funds for a capital fixed 
guideway grant, the project sponsor must certify, consistent with 49 
U.S.C. 5309(c)(1)(B), that it ``has or will have the legal, financial, 
and technical capacity to carry out its proposed program of projects, 
including safety and security aspects of that program'' throughout the 
life of the project. In many cases, FTA accepts the annual 
certification of the project sponsor as sufficient evidence that it 
possesses adequate technical capacity and capability. In some 
instances, however, FTA has reason to question the sponsor's technical 
capacity to manage the scale, expense, or complexity of the proposed 
project, thus, FTA must make an independent assessment of the sponsor. 
Through this rulemaking, FTA expects to set specific performance 
standards for technical capacity and capability. When assessing 
technical capacity, FTA may consider the results of its routine 
oversight reviews. Recurring and specialized reviews give FTA an 
opportunity to verify the grantee's Certifications and Assurances (see 
Circular C 5010.1D, Chapter II.3, Responsibilities of Grant 
Management). In cases where FTA finds that a project sponsor's 
certifications are inaccurate, FTA may withhold grant approval until it 
can verify the accuracy of the sponsor's certifications.
    Technical capacity and capability is interpreted to mean evidence 
of an effective management approach, appropriate organizational 
structure, sufficient experienced staff, adequate internal and external 
controls and other resources (project partners, consultant support, and 
other non-sponsor agency) to administer the complexities of the capital 
project. FTA is seeking comment on what is the appropriate minimum 
demonstration of capacity and capability and whether there are times 
when FTA should seek more information to demonstrate capacity.
2. Satisfactory Continuing Control
    A statutory requirement contained in 49 U.S.C. 5309(c)(1)(B) is 
that FTA must assure itself that the project sponsor will have 
satisfactory continuing control over the use of the equipment or 
facilities. In short, this means that the project sponsor must own the 
assets,

[[Page 46518]]

have a long-term lease, or otherwise be able to ensure that the federal 
investment will endure for the useful life of the investment. FTA's 
circulars contain guidance on satisfactory continuing control.
3. Maintenance of Facilities and Equipment
    The section 5309(c)(1)(B) requirement concerning this provision 
requires not only that the project sponsor have the capability to 
maintain the equipment or facilities, but that the project sponsor 
demonstrates the willingness to do so. Again, the FTA has typically 
relied on a certification for this requirement, except in the case of 
New Starts, where there is a statutory requirement that the sponsor 
demonstrate adequate financial resources to maintain and operate the 
existing system while expanding its capacity. We are considering 
requiring project sponsors to develop and apply an asset management 
plan for all fixed guideway capital projects. FTA proposes to use its 
current state of good repair (SGR) initiative to further refine its 
definition of asset management plan. However, FTA believes that an 
asset management plan would assist grantees in project identification 
and prioritization by showing the condition of existing facilities, 
equipment, and rolling stock, and by producing schedules for major 
maintenance or replacement along with estimated replacement, 
rehabilitation, and repair costs.
4. Financial Plan
    The statute currently requires an annual financial plan for all 
projects exceeding $1 billion. FTA is considering whether to require 
some type of financial plan for all fixed guideway capital projects. 
Such a plan may include the identification of all Federal, State, and 
local resources anticipated to be used for the project. FTA invites 
comment on what should be the minimum expectations for financial plans 
of fixed guideway capital projects.
5. Grant Project Description, Budget and Milestones.
    FTA Circulars require that a grant application contain sufficient 
project description, budget and milestones for both the sponsor and FTA 
to know what is included in the project and the timeframe for 
implementation. However, there is considerable disparity in the kind of 
information submitted and this can often cause delay in grant 
approvals. In order to assure consistency and transparency, FTA is 
considering enhancing the current grant project description, budget and 
milestone information it collects for fixed guideway capital projects. 
The agency is further considering the best way to elicit adequate 
detail to provide valuable oversight of project planning and 
implementation. FTA has found that project implementation delays are 
often caused by poor or incomplete planning, which means issues get 
addressed during implementation usually with both a time and cost 
impact. By including a more detailed description of the planning 
aspects of the project, FTA could assure appropriate oversight of these 
activities and that the project experiences fewer implementation 
delays.

B. Major Capital Projects

    The design and construction of a major capital project is a 
challenging undertaking from a variety of perspectives, including the 
large number of organizations involved in delivering the project, the 
diverse interests of the organizations and individuals that have a 
stake in the project, the potential imbalance between the quantity of 
human resources with the right skill sets required to deliver a project 
and the current organizational resources of the project sponsor, and 
the timing and cost of procuring goods and services in a competitive 
market. Additional challenges include integrated work flow processes 
and controls that are internal and external to the owner's 
organization, and management of the people, processes, physical and 
financial resources needed to successfully complete the project. Based 
on FTA's experience, projects that exceeded their budget or schedule 
forecast typically encountered problems obtaining experienced staff in 
a timely manner or failed to properly manage cost increases that were 
within their control, including contract change orders.
    Therefore, FTA proposes to strengthen its requirements for major 
capital project sponsors by requiring them to demonstrate that they 
have sufficient staff in place to demonstrate the capacity and 
capabilities to successfully implement their proposed projects, as 
opposed to simply relying on a plan to acquire the needed personnel. 
Other changes would be aimed toward improving the effectiveness of the 
FTA-required project management plan by requiring processes to be in 
place, as described below, and proposing criteria to be used to measure 
grantees' success in achieving desired outcomes or output and reporting 
the results to FTA.
1. Technical Capacity and Capability
    FTA's minimum expectations for a sponsor to demonstrate technical 
capacity and capability include a set of policies and procedures 
inclusive of resources and authority, defined, implemented, and 
maintained by the sponsor's project management organization that 
demonstrates its ability to: (1) Manage the project at each stage of 
development, including the transitions between stages of development 
and implementation; (2) conform to grant agreements, applicable 
statutes, codes, ordinances, and safety and security standards; (3) 
comply with FTA requirements on the part of agencies, consultants, 
contractors, and subcontractors working under approved third party 
contracts or inter-agency agreements; (4) maintain the project work 
schedule agreed to by FTA and the sponsor and constantly monitor grant 
activities to assure that schedules are met and other performance goals 
are being achieved; (5) keep expenditures within the latest approved 
project budget; (6) select and implement appropriate project delivery 
methods; (7) implement an effective communications program to assure 
that all project functions work effectively towards project delivery; 
(8) demonstrate continuous in-house administrative and management 
direction of project implementation; and (9) conduct adequate technical 
inspection and supervision by qualified professionals of all work in 
progress.
    FTA would expect most, if not all, of the matters identified above 
to be addressed in the project management plan, or alternatively in a 
separate document that is clearly identified in the PMP and 
incorporated by reference.
2. Project Management Plan (PMP)
    The project sponsor must submit a formal and documented management 
approach that embodies the agency's policies, practices and procedures. 
Ideally, the PMP should outline in detail the sponsor's plan for 
developing and implementing the project, including the monitoring that 
will take place to ensure that each major phase or stage in the project 
development process will be duly executed. The PMP should basically 
define what the project is, the person responsible for implementation, 
and when the work will be performed. The plans required should not be 
interpreted as ``procedures.'' Procedures define how the work or 
functions are to be implemented in conformance to a plan that sets out 
the underlying philosophy and approach to each process. While the 
procedures might

[[Page 46519]]

identify who does something and when, the plan would describe why and 
what the action means.
    FTA is considering placing additional emphasis on the PMP as a 
primary tool in the sponsor's management of the project. The PMP should 
demonstrate that the sponsor has thoroughly considered all phases of 
the project, giving careful thought, in particular, both to the methods 
used to execute the project and the interfaces between various 
participants. The PMP should explicitly define the objectives of the 
project and the methods and resources needed to meet those objectives. 
It should lay out the overall management strategy, including project 
controls, and the responsibilities, authorities, and measures of 
performance for all parties involved. Additionally, the PMP should 
reflect the unique characteristics of each project, such as the exact 
scope of work and specific resources, budget, and schedule. The PMP may 
be a compilation of associated plans or ``sub'' plans. Each sub plan 
should be incorporated into the PMP by reference and a copy appended, 
if practical, or as a minimum the signature page of the sub plan should 
be provided. Additionally, FTA may require that the PMP and associated 
sub plans packaged in a single or separate volume be supported by 
individual procedures or references to existing procedures. For 
example, a Test and Inspection Plan would be supported by detailed test 
procedures and QA/QC procedures, but the procedures would be made 
available to FTA on request instead of being submitted with the PMP.
    FTA envisions that project sponsors will submit a core PMP document 
for all major capital projects, tailored for the type of project for 
which it is used, and including, at a minimum, the following sections 
or stand-alone volumes or references to existing plans that serve the 
same purpose: (1) General Project Overview (description, objectives, 
performance measures, management approach, etc.); (2) Defined Scope, 
Budget and Project Master Schedule; (3) Quality Assurance/Quality 
Control (QA/QC) Plan; (4) Procurement Plan; (5) Safety and Security 
Management Plan; (6) Risk and Contingency Management Plan; (7) Staffing 
Plan (organizational chart, staff roles and responsibilities); and (8) 
Project Controls and Systems. FTA expects the project sponsor's 
responsible office supervisor/manager would approve the plan for his/
her respective office prior to submittal to FTA for approval. For 
example, the head of QA/QC would approve the QA/QC Plan for the 
proposed major capital project. This allows an integrated approach to 
developing the PMP and is expected to result in a more effective and 
efficient document. FTA would require each associated sub plan and the 
overall PMP to be updated as needed and resubmitted for FTA's approval.
    In addition to the above core PMP and associated plans, the 
following sub plans are examples of what a project sponsor would 
develop and integrate into the PMP: (1) Real Estate Management Plan; 
(2) Fleet Management Plan; (3) Noise and Vibration Control Plan; (4) 
Rail Activation Plan; and (5) Geotechnical Risk Management Plan.
    In the forthcoming Notice of Proposed Rulemaking (NPRM), FTA will 
provide further guidelines on when each plan within the PMP should be 
submitted for approval.
    Currently for New Starts projects the sponsor establishes a PMP 
before entry into Preliminary Engineering and updates the PMP before 
advancing into the Final Design, construction, and start-up phases of a 
major capital project. FTA seeks comment on whether the requirement for 
Small Starts projects that are designated as major capital projects 
should establish a less detailed PMP than for New Starts projects. A 
less detailed PMP would be required before entry into project 
development and would be updated before advancing into construction.
    FTA is also seeking comment on whether all or portions of the 
project management plan should apply to some or all fixed guideway 
capital projects or whether you would suggest a different approach to 
project management, keeping in mind that FTA must ensure that project 
sponsors manage their projects effectively and deliver projects on time 
and within budget, while at the same time achieving projected benefits 
and meeting quality standards.
3. Project Implementation
    FTA may require project sponsors to demonstrate readiness to 
advance their projects to the next phase or stage in the project 
development process by successfully implementing the prerequisite 
requirements. Currently, a typical New Starts project moves through six 
major phases--Alternative Analysis, Preliminary Engineering, Final 
Design, Full Funding Grant Agreement, Construction, and Revenue Service 
Operations. A typical Small Starts project moves through five major 
phases, with Preliminary Engineering and Final Design being collapsed 
into a single phase called Project Development. FTA has developed 
checklists for grantees to use as a quick reference guide and to 
evaluate readiness to move into the next phase of project 
implementation. To view existing checklists for Preliminary 
Engineering, Final Design, and Full Funding Grant Agreements (FFGA) go 
to: http://www.fta.dot.gov/planning/newstarts/planning_environment_218.html. If the proposals outlined in this ANPRM are implemented, FTA 
would create new checklists for all major capital projects as a guide 
to project implementation. FTA seeks your comments on whether this 
would be useful.
4. Performance Requirements
    FTA would like project sponsors to use the PMP as a tool to create 
a series of performance measures that they could report against. FTA 
would use this information to report on the success of major capital 
projects.
5. Reporting
    FTA intends to propose specific reporting requirements for 
recipients of federal funding for major capital projects, including but 
not limited to, value engineering reports, safety and security 
management reports, monthly progress reports, and cost updates for 
FTA's cost databases. We seek comments both as to the appropriateness 
of these reporting requirements as well as the potential content of 
such reporting requirements. Please make your comments specific to each 
of the suggested reports.
6. Exceptions for Past Performance
    FTA is considering relaxing requirements for project sponsors who 
have successfully completed other major capital projects within the 
past 7 to 10 years if, for example, it can be demonstrated that the 
organization has retained critical resources like the project manager, 
the organization's business processes and procedures have not been 
significantly altered, and the project involves the same or similar 
technology. In the above context, determining the successful completion 
of a major capital project would be based on FTA-established criteria 
such as cost and schedule performance contained within a percentage of 
the baseline cost estimate or revenue service date. We seek comment on 
whether you agree with this approach. Are there other factors that 
might justify relaxing FTA's requirements?

C. Questions

    1. If a project budget is under $100 million, what is the 
appropriate demonstration of capacity and capability? Are there 
circumstances under which FTA should seek

[[Page 46520]]

additional demonstration of the project sponsor's technical capacity 
and capability for a project categorized as a fixed guideway capital 
project beyond what is described in this document?
    2. What plans or requirements should FTA consider for a single 
purpose grant like a fixed guideway major capital project? Should a 
portion of the PMP apply?
    3. Should the requirement for demonstrating satisfactory continuing 
control be different for a fixed guideway capital project than the 
regular FTA formula grant?
    4. Are more detailed milestones and budget detail in a TEAM grant a 
feasible mechanism for managing and providing oversight to a fixed 
guideway capital grant? What other tools should be considered?
    5. What minimum requirements should be contained in an asset 
management plan?
    6. Would checklists for all fixed guideway capital projects be 
useful?
    7. Should all or portions of the project management plan apply to 
some or all fixed guideway capital projects? What portions would apply 
to what specific types of fixed guideway capital projects? Please be as 
specific as possible.
    8. Would you suggest a different approach to project management, 
keeping in mind that FTA must ensure that project sponsors manage their 
projects effectively and deliver projects on time and within budget, 
while at the same time achieving projected benefits and meeting quality 
standards?
    9. Please comment on FTA's integrated project management plan 
approach discussed above. Do you think the integrated approach is more 
practical? If not, how would you structure the PMP to facilitate its 
usefulness?
    10. Do you agree with FTA's plan to relax technical capacity and 
capability requirements for more experienced project sponsors that meet 
certain criteria? If you agree, are there other factors that FTA should 
consider?
    11. Should FTA require all sponsors of major capital projects to 
develop and update PMPs for every project at corresponding stages in 
project development?
    12. Other than the statutory evaluation process that applies to New 
Starts and Small Starts, should financial plans for all major capital 
projects meet the same minimum standards?
    13. For major capital projects other than Section 5309 New Starts, 
should FTA specify a minimum number of years that a grantee's financial 
plan should cover? For example, is a financial plan covering three to 
five years of sufficient length to determine a grantee's financial 
capacity? Or should FTA require that the financial plan extend through 
the time period required for completion of the major capital project?

IV. FTA Oversight of Fixed Guideway and Major Capital Projects

A. Fixed Guideway Capital Projects

    Not all fixed guideway projects are major capital projects. 
Consequently, the oversight of many Fixed Guideway Capital Projects is 
performed primarily by FTA staff in its regional offices. PMOCs are 
currently utilized to assist FTA in providing oversight of Major 
Capital Projects only.

B. Major Capital Projects

    In the early 1980's several FTA-funded transit projects suffered 
major setbacks due to problems with quality, cost overruns, and delays 
in schedules. Thus, FTA received its project management oversight 
program mandate and funding from Congress in the Surface Transportation 
and Uniform Relocation Act of 1987. Congress directed FTA (then UMTA) 
to establish the Project Management Oversight (PMO) Program. This 
program has grown correspondingly with the growth of the overall FTA 
program.
1. Roles and Responsibilities
    Since the inception of its Project Management Oversight program in 
1989, FTA has supplemented its own staff with Project Management 
Oversight Contractors (PMOCs) to provide oversight for major capital 
projects. The primary role and responsibility of the PMOC is to help 
FTA ensure that such projects are on time, within budget, and in 
conformance with Federal requirements; are constructed to grantees' 
approved plans and design specifications; and are efficiently and 
effectively implemented. An initial, important role of the PMOC is to 
review the project sponsor's project management plan on behalf of FTA, 
and to make recommendations concerning its adequacy.
    During the design, construction, start-up and operational phases of 
a project, on behalf of FTA, the PMOC monitors and reports on the 
project's development and implementation, consistent with its approved 
project management plan and accepted engineering and project management 
practices.
    The PMOC performs routine project management oversight monitoring 
through on-site reviews and off-site document reviews. FTA uses these 
reviews to oversee the project and to conduct quarterly review meetings 
with the project sponsor. Periodic reports are submitted to FTA 
documenting project status, activities, and open issues including, but 
not limited to, the following:
     Timely management decisions.
     Delegations of authority.
     Management of project scope.
     Internal controls.
     Schedule analysis.
     Cost estimates and trends, including forecasting.
     Delivery of a quality product.
     Project security/safety.
     Continuing technical capacity.
     Risk assessment and contingency management.
    FTA's primary objectives for providing Project Management Oversight 
of major capital projects are to assess grantees' technical capacity 
and capability and project management experience to successfully 
implement major capital projects and to monitor projects to ensure that 
they are progressing on time, within budget, and in accordance with the 
grantees' approved plans.
    While FTA's program has grown significantly since 1989, its staff 
size has stayed the same. The PMOCs help to fill this resource gap as 
well as to provide specialized expertise when needed. While the 
oversight program has grown based on its percentage takedown of an 
expanding program, the need for oversight has increased even faster 
than the available funding because the larger program has generated 
both higher demand and more complex projects. FTA seeks comment on how 
it should best use its PMOCs to supplement its limited staff resources.
2. Risk-Informed Project Management Oversight Approach
    Over the last five years, FTA has refined its approach to oversight 
to integrate risk analyses and transit specific databases to help the 
grantee deliver a successful project. By means of a Full Funding Grant 
Agreement (FFGA) for New Starts, or Project Construction Grant 
Agreement (PCGA) for Small Starts, both FTA and a grantee mutually 
agree on the scope, cost and schedule of a particular project. 
Management of the project to ensure that all three are delivered 
successfully begins early in the project development phase.
    FTA has increased its use of risk assessment, management and 
mitigation strategies to ensure that Major Capital projects are 
constructed on-time and within budget. FTA relies on a portfolio of 
risk management tools to prevent project costs from escalating, to 
assess

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the magnitude of risks in a project, and to help the project sponsor 
predict and establish a project budget and schedule. The most important 
objective of risk assessment and management protocols is to help the 
project sponsor predict the budget and schedule and to ensure that the 
sponsor can complete the project within the budget and schedule 
identified in the FTA grant award.
    Project risks track the project development process. In general 
terms, they can be described as follows:
     Requirements Risk. The first step in project development 
is to identify the requirements--risks associated with definition of 
basic project needs and transit system requirements to meet those 
needs;
     Design Risk. The second step is project design--risks 
involving the adequacy of the information available at each stage of 
design and engineering, geotechnical conditions in particular, and the 
impact of redesign;
     Market Risks. The third step is to identify market risks--
risks associated with both the procurement approach and the market 
conditions that can affect the cost of materials and the availability 
of bidders for construction services, materials, real estate, and 
manufactured products like vehicles; and
     Construction Risks. The final step is to identify 
construction risks--those risks associated with the actual construction 
and start-up of the system.
    Once risks are identified, FTA and project sponsors must determine 
the best method for managing those risks. The preferred methods for 
managing risk are avoidance, reduction, and mitigation. Because they 
are really only ways of providing more up-front funding or reducing 
overall costs but do not reduce risk, less preferred risk management 
techniques include increasing contingency, reducing project scope, or 
reducing the level of service. FTA works with each project sponsor to 
determine the most feasible strategy for each project.
    Project sponsors document this risk-informed management process in 
the project management plan. Including these strategies can help ensure 
that the project sponsor has the requisite technical capacity and 
capability to deliver the project on time and within budget by ensuring 
that the project sponsor understands methods for addressing risks and 
that it implements strategies to avoid future delays.
    FTA can tailor these risk assessment and management tools to take 
into account the unique circumstances of a project, such as sponsor 
organization and technical capacity and capability, and the project 
complexity or status.

C. Questions

    1. Should FTA assign PMOCs to oversee projects other than Major 
Capital Projects? Please provide the rationale for your recommendations 
including how oversight of these projects should alternatively be 
provided if PMOCs are not utilized.
    2. At what stage in the development process should FTA assign PMOCs 
to New Starts projects? Explain the basis for your recommendation.
    3. Other than a detailed review of a grantee's financial plan, what 
other methods might FTA utilize to ensure a grantee has the financial 
capacity to construct and operate a major capital project?
    4. Please comment on FTA's Risk Management approach. If you do not 
agree with FTA's approach, please recommend an alternative and provide 
a basis for your recommendation.
    Following the close of the comment period on this ANRPM, FTA will 
summarize and respond to the comments and issue a Notice of Proposed 
Rulemaking that posits explicit text for a rewrite of the regulation at 
49 CFR Part 633. We expect to publish such a Notice of Proposed 
Rulemaking in 2009.

    Issued this 4th day of September, 2009.
Peter M. Rogoff,
Administrator, Federal Transit Administration.
[FR Doc. E9-21849 Filed 9-9-09; 8:45 am]
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