Agenda - 01-24-2005-9b - Laserfiche WebLink

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SECTION 5: FIVE-YEAR FINANCIAL PLAN FINAL REPORT 7/ the County (costs are billed as one item to OPT). Cost per hour is the sum of $16.83 for driver salaries, $4.23 for other staff, and $1.17 for "other providers". To accurately calculate the true costs (operating plus administrative) of providing transportation services, the following procedure is used: 1 Multiply the number of vehicle miles by the fully-allocated cost rate per mile ($0.41). 2. Multiply the number of vehicle hours by the fully-allocated cost rate per hour ($22.23). 3. Add the results of Calculation 1 to the results of Calculation 2. 4. Multiply the result of Calculation 3 by the fixed-rate factor (1.24), to account for fixed expenses. 5. The resulting quantity is the fully-allocated cost of providing service. For example, assume a contract is projected to consume 40,000 annual vehicle miles and 3,000 annual vehicle hours. The fully allocated cost would total $103,032 [((40,000 X $0.41) + (3,000 X $22.23)) X 1 24]. The fully allocated cost is not necessarily the billing rate to the individual agency. This billing rate needs to incorporate three additional factors -the receipt of funding from NCDOT, FTA, and fares; the need to build up an operating reserve; and the local share of vehicle purchases. The allocated factors above are reduced to reflect the $259,930 in DOT/FTA funds, and increased by 6 percentto create a three-month operating reserve for OPT at the end of four years. An additional increase of $16,746 has been included to cover the estimated annualized cost of the local share of vehicle purchases, assuming NCDOT cost averages and a 10 percent local match. The operating reserve provides a cushion for unexpected expenses, such as the dramatic rise in gasoline prices this year. A 6 percent cushion will build up a three-month cushion at the end of four years. The adjusted fully-allocated cost rates are as follows: Fully-allocated rate per mile = $0.36 Fully-allocated rate per hour = $19,76 Fixed-rate cost factor = 1.13 The cost billed to the client agency would be $83,258 instead of the full cost of $103,032. This costing approach has some risks because it assumes that DOT funding will be proportional to the total expenses of the service To determine the appropriate billing rate, the fully allocated cost for the service is divided by the desired unit of service (vehicle hours, vehicle miles, or passenger trips) Using the previous example, assume a rate per vehicle hour is desired, The unit rate for the contract would be $27.75 per vehicle hour ($83,258 / 3,000) Note that the rate derived from the fully-allocated cost is based on specific vehicle hours and miles of service. Thus, the provider must have confidence in these figures to calculate an accurate rate, Orange County 5-3 COMMUNITY TRANSPORTATION IMPROVEMENT PLAN --