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TABLE OF CONTENTS
LIST OF FIGURES
1 Annualized Cost Estimates ($ 2007) ................................................................... 3-3
2 Ridership Trends by Fiscal Year ......................................................................... 4-1
3 Fare Revenue Trends by Fiscal Year................................................................... 4-2
4 Ridership Trends by Month ................................................................................ 4-2
LIST OF TABLES
1 Annualized Cost Estimates ($ 2007) ................................................................... 3-3
2 Estimates of Annual Down Time and Replacement Times .................................. 5-1
3 Net Revenue Per Rider ....................................................................................... 6-1
4 Net Revenue Per Rider Sensitivity Analysis........................................................ 6-2
1
Tramway Modernization Preliminary Engineering, Roosevelt Island Operating Corporation,
Parametrix Consulting, March 2007.
Discount Rate
In addition to life expectancy an assumption regarding the time value of money or
opportunity cost must be made to develop an annualized capital cost. In the public sector and
given current market conditions 5 percent is a reasonable assumed discount rate and is typical
of the existing cost for public sector long term financing.
Operations and Maintenance (O&M) Fees
The estimates of O&M fees are based on the current contract for operations and maintenance
as performed by Doppelmayr. From an operations perspective, Alternatives 2 and 3 are
fundamentally the same system as today, and while the new systems will likely require less
corrective maintenance in the near term, no reduction was made for the maintenance fee
(union labor, preference to keep “ahead” of maintenance rather than “behind,” and the
redundancy creates some minor additional maintenance). Alternative 4 was increased for the
anticipated staffing changes, as discussed with Armando Cordova (Operations Lead). In
addition, Alternative 4 receives a credit for a reduction in the cabin attendant hours based on
the possibility of using only one cabin at a time for off-peak hours
Maintenance Parts and Supplies Costs
The recent historical parts and supplies expenditures were used as a baseline and expanded
slightly based on the recommendations of Armando Cordova (Operations Lead). To adjust
this for Alternatives 2, 3 and 4, a relative estimate of near- to mid-term parts and supplies
costs was made. Parts and supplies costs for Alternative 4 are higher than Alternatives 2 and
3 simply because it has more moving parts.
Electrical Power Costs
The recent historical power cost averages were used for Alternative 1 and as a baseline for
estimating power costs for the other alternatives. Power costs for Alternatives 2 and 3 were
assumed to be nominally the same as Alternative 1. Power costs for Alternative 4 were
obtained by estimating the change in cabin hours under the dual system and applying that
ratio to the current power usage. Additional adjustments were made to the Alternative 4
estimates to account for its different power consumption characteristics compared to the other
alternatives. In summary Alternative 4 shows lower power costs compared to the other
alternatives since it can operate with only a single cabin during periods of low ridership. In
reality, the Alternative 4 savings may be greater because of the effect of peak power demand
which should be smaller for Alternative 4. In addition, power cost estimates were increased
by an additional 15 percent to reflect a rate increase that is known to RIOC
Total Annual Costs
Table 1 and Figure 1 illustrate the resulting estimated total annual cost for each of the
alternatives. The annual cost is the sum of the annualized capital investment, annual operating
and maintenance cost, annual parts and supplies costs and annual electrical power costs. As
can be seen annualized costs fall into a relatively tight range from $3.4 to $3.9 million. The
difference between Alternative 2, which has the lowest cost and Alternative 4, which has the
highest cost, is only 15 percent. Despite having the lowest initial capital costs, Alternative 1
is not the least expensive when its short life expectancy and greater on-going costs are
factored into the calculations.
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 $970,000 $930,000 $1,120,000 $1,330,000
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 $3,480,000 $3,390,000 $3,590,000 $3,870,000
$3.9 M
Alt 4: New Dual Shuttle
$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
180,000
160,000
140,000
Riders per Month
120,000
100,000
80,000
60,000
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300,000
250,000
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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
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Tram Alternatives
1 2 3 4
Annual Down Time 850 hours 580 hours 440 hours 25 hours
Down Time for Replacement 8 weeks 6 months 7 months 7 months
Adjusted Annual Ridership 1.90 million 1.97 million 2.00 million 2.11 million
Adjusted Annual Revenue $3.60 million $3.73 million $3.80 million $4.00 million
Total possible annual hours of operation = 7,436 hours
Tram Alternatives
1 2 3 4
Total Annual Cost $3,480,000 $3,390,000 $3,590,000 $3,870,000
Total Annual Revenue $3,600,000 $3,730,000 $3,800,000 $4,000,000
Net Annual Revenue $120,000 $340,000 $210,000 $130,000
Annual Ridership 1,900,000 1,970,000 2,000,000 2,110,000
Revenue Per Rider $0.06 $0.17 $0.11 $0.06
Sensitivity Analysis
The net revenue and cost per rider calculations are based on a number of factors as described
in the earlier sections of this report. Some of these factors involve estimates or forecasts that
are subject to varying levels of uncertainty and thus potentially differing outcomes. The two
factors having the greatest potential variability are the life expectancy estimates and the
forecasts of potential future down time for each of the alternatives. To understand the
impacts on the resulting net revenue/cost calculations a sensitivity analysis was undertaken
for both factors.
Life Expectancy Sensitivity
The base assumption is that the rehabilitation option (Alternative 1) would provide 7 years of
useful life before more major work would have to be undertaken. However, it was
acknowledged that given the system’s age this a professional judgment and could in reality
prove too short or too long. As a result, the impact of varying the life expectancy from 5 to 10
years was tested. The other three alternatives are essentially new systems and there is no
reason to expect any significant variability in their respective life expectancies. In addition,
the 30 year assumption, while somewhat arbitrary, is an industry standard and of such length
that varying it up or down by 5 years will have very little impact on the results of the
analysis.
Tram Alternatives
Revenue or Cost per Rider 1 2 3 4
Baseline $0.06 $0.17 $0.11 $0.06
High Range $0.24 $ 0.21 $0.13 $0.06
Low Range ($0.11) $0.17 $0.11 $0.06
7. NON-QUANTIFIABLE FACTORS
As discussed in the previous sections, it is apparent that considerations other than the cost to
move people will be the influencing factors in the choice of which tramway alternative to
implement. The other factors identified in the analysis include the means of rescue in the
event of system failure, system reliability and dependability, passenger service flexibility and
ADA access (access for the mobility impaired).
Safety / Rescue
All of the alternatives meet the industry standards for passenger safety. The primary
difference from a safety perspective is not in the normal operation of the system, but rather in
how the failure modes are handled. In Alternatives 1 and 2, there would be no significant
change in the level of redundancy in the system. Those failures today that would result in a
rescue scenario would also drive a rescue scenario in Alternatives 1 and 2. Alternative 3
provides an additional level of redundancy by designing for and supplying certain “live”
redundant components. For example, the design of the system could be such that in the event
of a gearbox failure, within a matter of minutes, a second gearbox could be engaged and used
to return the cabins to the terminals. While this redundancy does not inherently change the
safety of the system under normal conditions, it dramatically changes the passenger
experience in a failure mode. Alternative 4 would take this concept one step further by
providing a means, under nearly any failure, of returning the cabins to the terminals. For
example, it is possible with systems similar to Alternative 4 to return cabins to the terminals
even in the event of haul rope sheave failure.
Reliability/Dependability
The tramway has become the island’s lifeline to Manhattan and a highly reliable and
dependable system has great benefits to island residents. The benefit cost analysis includes
consideration of the lost ridership and revenue that results when the system is down both for
scheduled maintenance and unscheduled failures but does not account for the non-
quantifiable benefits of having a highly reliable service. From this perspective Alternative 4
clearly performs the best since it practically eliminates both scheduled and unscheduled down
time. Alternative 1 is the worst with past experience indicating that an average of 850 hours
of down time will be experienced each year. While the newer components and added
redundancy of Alternatives 2 and 3 show some improvement over Alternative 1 they are
forecast to experience 580 and 440 hours of down time per year, respectively.
Passenger Service Flexibility
For purposes of this analysis, each of the Alternatives was judged to have the same passenger
capacity. In general, the four Alternatives will have roughly the same effective cabin capacity
and the same travel time from one station to the other. A major advantage of Alternative 4
over the other Alternatives is not a change in system capacity, nor in headways but that
during times of maintenance, the system can provide 50 percent capacity. Currently, when a
maintenance procedure requires that the system be out of service there is no tramway service
for that period, or the maintenance cannot be performed continually. In the case of a dual
shuttle system, the maintenance could be performed during low demand times, much like
today, with adequate, continuous service provided by the other cabin. In addition, the dual
shuttle of Alternative 4 provides greater flexibility and should allow slightly shorter cycle
times during periods of heavy one-way passenger demand on the system. This in turn should
allow Alternative 4 to carry slightly more people in one direction when peak passenger
demands warrant.
ADA Access
Alternative 4 presents a major advantage for the Island’s mobility impaired population in that
it provides for the highest level of availability. This is achieved not by a different geometry of
cabins and terminals, but rather by virtue of the fact that maintenance can generally be
performed on one cabin while the other cabin operates. This would greatly reduce the
inconvenience to those with special accessibility needs who generally find the subway to be
an inferior mode of transit.
8. CONCLUSIONS
The analysis of benefits and costs for the tramway alternatives demonstrates that within the
range of the options being considered all would produce highly efficient investments to move
people to and from the island, and that the differences among the alternatives are relatively
small. Thus, the primary considerations in choosing an alternative become the more
non-quantifiable benefits.
Alternative 1 provides the baseline for comparison as it is the Alternative which is closest to a
“do nothing” approach. However, as described previously and in the referenced March 2007
Preliminary Engineering report, Alternative 1 does not provide the desired 25 years of
reliable service between Roosevelt Island and Manhattan.
In summary, using Alternative 1 as the baseline for comparison, the trade-offs become as
follows:
Alternative 2 – Replace with Similar Tramway
This alternative performs the best on a purely revenue per rider basis compared to all of the
others. In addition compared to Alternative 1 it:
· Reduces the likelihood of a system failure;
· Improves reliability and dependability by reducing unscheduled down time;
· Provides no additional flexibility improvement compared to Alternative 1 to respond
to rescues should a system failure occur, work-arounds during scheduled and
unscheduled outages, and peak passenger directional flow demands; and
· Has enhanced ADA access owing to the improved reliability.
Alternative 3 – Replace with Similar Tramway, Add Redundancy
This alternative reduces the per passenger revenue by 6 cents compared to Alternative 2. In
addition compared to Alternative 2 it:
· Further reduces the likelihood of a system failure and the need for system rescue;
· Further improves reliability and dependability by reducing unscheduled down time;
· Provides no service flexibility enhancement over Alternatives 1 and 2; and
· Has enhanced ADA access over both Alternatives 1 and 2 owing to improved
reliability.
Alternative 4 – Replace with Dual Shuttle Operation
This alternative reduces the per passenger revenue by 11 cents compared to Alternative 2. In
addition compared to Alternative 2 it:
· Virtually eliminates the need for a system rescue operation should the system fail;
· Further improves reliability and dependability by nearly eliminating unscheduled
down time;
· Provides significant flexibility improvement compared to Alternatives 1, 2 and 3 to
respond to rescues should a system failure occur, work-arounds during scheduled and
unscheduled outages, and peak passenger directional flow demands; and
· Provides the most reliable and dependable ADA access of all of the alternatives.