FINANCIAL PLANNING TECHNIQUES: WHAT ELEMENTS ARE INCLUDED IN A GOOD FINANCIAL PLAN?

While current uncertainties in local, state and federal support for transit, management's attention should increasingly be directed towared financial planning. Financial planning identifies needs, develops managerial strategies, helps make the best use of limited resources, may reduce uncertainty, and helps educate the public and public officials. A transit property's long-range planning process is best carried out through development of a strategic plan, which is not only a capital investment plan but an integration of long- and short-term investment decisions with operational and human resource decisions. A strategic plan attempts to lay out a span of between 1 and 10 years and advance the property to what it should be doing in the future, based on the best information available and a vision of how transit may best serve the community. Strategic planning begins with an analysis of the environment in which the transit property exists. Next comes consideration of basic assumptions regarding the property, followed by an assessment of the current posture of the property--that is, a measure of the material and human resources available to carry out needed tasks. An analysis of the market potential for the transit property, which includes an estimate of future travel demand and other community needs that may affect transit, is also needed. The development of goals and objectives, which should take into account all groups and jurisdictions that will be affected, will emerge from the foregoing; goals will be affected by community values and the priority of various activities important in the community in which transit may play a role. A market plan must be developed. They types of service, structure of the system, and kinds of management activities will vary according to the segments of the market to be pursued. Facilities, equipment, organizational resources, and political and legislative requirements needed to achieve the objectives and serve the target markets must be determined. In moving from a strategy to a financial plan, ongoing programs must be reviewed and what needs to be done must be assessed, based on on goals, priorities, and objectives for the next few years. Cost estimates, including those for personnel, maintenance, energy, asnd capital, must be made. Revenue estimates must also be completed, including forecasts of number of passengers, average fare paid, demand patterns, and subsidies. A formal interative procedure for matching revenues and costs--e.g., scenario planning--is also needed. The budget process turns ideas and desires about a financial plan into a concrete, annual plan. Budgeting is detailed planning and implementation of key decisions of the financial world of transit are expansion of service areas, inflation-sensitive financing, predicting fares, elasticity of demand, and the transit property's ability to control its costs.

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    • Distribution, posting, or copying of this PDF is strictly prohibited without written permission of the Transportation Research Board of the National Academy of Sciences. Unless otherwise indicated, all materials in this PDF are copyrighted by the National Academy of Sciences. Copyright © National Academy of Sciences. All rights reserved. This paper appeared in TRB Special Report 208, Proceedings of the Conference on Evaluating Alternative Local Transportation Financing Techniques. Conference was conducted by TRB and sponsored by FHWA and UMTA, November 28-30, 1984, Denver, Colorado.
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    Transportation Research Board

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  • Authors:
    • Smerk, George M
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  • Publication Date: 1985

Media Info

  • Media Type: Digital/other
  • Features: Figures;
  • Pagination: pp 32-36
  • Monograph Title: PROCEEDINGS OF THE CONFERENCE ON EVALUATING ALTERNATIVE LOCAL TRANSPORTATION FINANCING TECHNIQUES
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    Open Access (libre)

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Filing Info

  • Accession Number: 00451151
  • Record Type: Publication
  • Files: TRIS, TRB, ATRI
  • Created Date: Nov 30 1985 12:00AM