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Tramway Modernization

Cost Benefit Analysis


Roosevelt Island Tramway
October 4, 2007
Alternatives
1. Replace Critical Subsystems
2. New Similar Tramway
3. New Similar Tramway with Added
Redundancy
4. New Dual Shuttle
Alternative 1
Replace Critical Subsystems

• New track ropes, roller chains,


hangers, and cabins
• 7 year life expectancy
• Capital cost: $5.6 million (2007 $)
• 8 weeks downtime for subsystem
replacement
Alternative 2
New Similar Tramway

• Fundamentally new system


• Existing functionality and
performance
• 30 year life expectancy
• Capital cost: $14.25 million (2007 $)
• 6 months downtime for replacement
Alternative 3
New Similar Tramway with
Added Redundancy
• Fundamentally new system
• Improved service and availability
• 30 year life expectancy
• Capital cost: $17.25 million (2007 $)
• 7 months downtime for replacement
Alternative 4
New Dual Shuttle
• Replace with two systems
• Improved service, reliability, and
flexibility
• 30 year life expectancy
• Capital cost: $20.4 million (2007 $)
• 7 months downtime for replacement
Life Cycle Costs

• Capital costs
• Operating and maintenance costs
• Power costs
• Parts and supplies costs
Life Cycle Costs Key Assumptions
• All Costs in 2007 $
• Inflation impacts future costs and
revenues equally
• Time value of money is 5% annually
• Ridership and revenue grow by 20%
• Base ridership and revenue same for
all alternatives
Annualized Life Cycle Costs

Alt 4: New Dual Shuttle $3.9 M

$3.6 M
Alt 3: New Similar Tram + Redundancy

$3.4 M
Alt 2: New Similar Tram

$3.5 M
Alt 1: Replace Critical Subsystems
$0 $1 M $2 M $3 M $4 M

Capital O&M Power Parts and Supplies


Riders per Month

60,000
80,000
100,000
120,000
140,000
160,000
180,000
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2005
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2006
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Historical System Ridership

Fe
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Revenue per Month

-
100,000
150,000
200,000
250,000
300,000
350,000

50,000
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2005
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2006
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2007

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Historical System Revenue

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System Ridership and Revenue
Sept. 06-Aug. 07
1.6 M Riders, $3.0 M Revenue

180,000
160,000
140,000
120,000
Riders per Month

100,000
80,000
60,000
40,000
20,000
0
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Period 2004-2005 2005-2006 2006-2007


System Down Time
Annual Down Time
Total Annual Operating Hours: 7,436

Alt 4: New Dual Shuttle


25 Hours

Alt 3: New Similar Tram + Redundancy


440 Hours

Alt 2: New Similar Tram


580 Hours

Alt 1: Replace Critical Subsystems


850 Hours

0 200 400 600 800 1000


Annual Hours of Down Time
10
Net Annual Revenue / Rider
Revenue per rider =

Annual Revenue – Annual Costs

Annual Ridership
Net Annual Revenue / Rider
Alt 4: New Dual Shuttle
$0.06

Alt 3: New Similar Tram + Redundancy


$0.11

Alt 2: New Similar Tram


$0.17

Alt 1: Replace Critical Subsystems


$0.06

$0.00 $0.02 $0.04 $0.06 $0.08 $0.10 $0.12 $0.14 $0.16 $0.18
Revenue
Summary of Cost-Benefit
Tram Alternatives
1 2 3 4
Capital Costs $5,600,000 $14,250,000 $17,250,000 $20,400,000
Life Expectancy of Investment (years) 7 30 30 30
Down Time for Replacement 8 weeks 6 months 7 months 7 months
Discount Rate 5.00% 5.00% 5.00% 5.00%
Annualized Capital Cost $967,791 $926,983 $1,122,137 $1,327,049

Annual Operating and Maintenance Costs $2,300,000 $2,300,000 $2,300,000 $2,400,000


Annual Power Costs $140,000 $140,000 $140,000 $105,000
Annual Parts and Supplies Costs $75,000 $25,000 $25,000 $35,000

Total Annual Cost $3,482,791 $3,391,983 $3,587,137 $3,867,049


Base Annual Ridership (2007) 1,900,000 1,900,000 1,900,000 1,900,000

Base Annual Revenue (2007) $3,600,000 $3,600,000 $3,600,000 $3,600,000


Annual Hours of Operation 7,436 7,436 7,436 7,436
Hours of Annual Down Time 850 580 440 25
Revised Annual Ridership 1,900,000 1,968,989 2,004,761 2,110,799

Revised Annual Revenue $3,600,000 $3,730,715 $3,798,494 $3,999,408

Net Annual Revenue $117,209 $338,732 $211,357 $132,359


Net Revenue Per Rider $0.06 $0.17 $0.11 $0.06
Non Quantifiable Benefits
• Safety/rescue
• Reliability/dependability
• Flexibility
• ADA Access
Alternative 2
New Similar Tramway
Increases Revenue Per Rider by 11 Cents
Compared to Alternative 1
• Reduces likelihood of a system failure
• Improves reliability and dependability by
reducing unscheduled down time
• Flexibility of service similar to Alternative 1
• Improved reliability enhances ADA Access
Alternative 3
Added Redundancy
6 Cents Per Rider Compared to Alternative 2
Adds:
• Redundancy reducing likelihood of need for
rescue operation should system fail
• Further improves reliability and dependability
by reducing unscheduled down time
• Flexibility of service similar to Alternatives
1 and 2
• Improved reliability enhances ADA Access
Alternative 4
Dual Shuttle
11 Cents Per Rider Compared to Alternative 2
Adds:
• Virtually eliminates need for rescue operation should
system fail
• Improves reliability and dependability by nearly
eliminating unscheduled down time
• Dual/independent system adds service flexibility not
provided by other alternatives
• Provides most reliable/dependable ADA Access1
What A Dual Shuttle Might Look Like
or…