Capital Project Management, 56363-56381 [2011-23371]

Agencies

• Federal Transit Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 76, Number 177 (Tuesday, September 13, 2011)]
[Proposed Rules]
[Pages 56363-56381]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-23371]


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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: Notice of proposed rulemaking; request for comments.

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SUMMARY: This proposal would transform the current FTA rule for project 
management oversight into a discrete set of managerial principles for 
sponsors of major capital projects; enable FTA to more clearly identify 
the necessary management capacity and capability of a sponsor of a 
major capital project; spell out the many facets of project management 
that must be addressed by a sponsor of a major capital project in a 
project management plan; change the scope and applicability of the 
rule; tailor the level of FTA oversight to the costs, complexities, and 
risks of a major capital project; set forth the means and objectives of 
FTA risk assessments; and articulate the roles and responsibilities of 
FTA's project management oversight contractors.

DATES: Comments must be received on or before November 14, 2011. 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 https://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 
https://www.regulations.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 may wish to consider 
using an express mail firm to ensure the prompt filing of any 
submissions not filed electronically or by hand.

FOR FURTHER INFORMATION CONTACT: For program matters, please contact 
Aaron C. James, Sr. at (202) 493-0107 or aaron.james@dot.gov, or Carlos 
M. Garay at (202) 366-6471 or carlos.garay@dot.gov. For legal matters, 
please contact Scott A. Biehl at (202) 366-0826 or scott.biehl@dot.gov, 
or Jayme L. Blakesley at (202) 366-0304 or jayme.blakesley@dot.gov. FTA 
is headquartered at 1200 New Jersey Avenue, SE., East Building, 
Washington, DC 20590. Office hours are from 8:30 a.m. to 5 p.m. Monday 
through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION: 

Background

    FTA is authorized by 49 U.S.C. 5327 to conduct oversight of major 
capital projects, and to promulgate a rule for that purpose. The 
statute also obliges FTA to codify a definition of major capital 
project to delineate the types of projects governed by the rule. 
Further, the statute authorizes FTA to obtain the services of Project 
Management Oversight Contractors (PMOCs) to assist the agency in 
overseeing the expenditure of Federal financial assistance for major 
capital projects--both under the discretionary Major Capital Investment 
(``New Starts'') program and the formula Fixed Guideway Modernization 
(``FGM'') program authorized by 49 U.S.C. 5309.
    FTA's predecessor agency, the Urban Mass Transportation 
Administration (UMTA), issued the original rule for oversight of major 
capital projects on September 1, 1989, at 49 CFR part 633 (54 FR 
36708). At the time, UMTA's capital programs were comparatively small--
the agency's annual capital grants totaled a little more than $2 
billion--and there were a mere 25 task orders in effect for the 
services of PMOCs. Even then, however, the Congress recognized a 
compelling need to strengthen the agency's management and oversight of 
major capital projects.

[[Page 56364]]

Thus, in 1987, the Surface Transportation and Uniform Relocation 
Assistance Act (STURAA) (Pub. L. 100-17, Sec. 324, 101 Stat. 132, 235) 
both directed a rulemaking for oversight of major capital projects and 
established a ``take down'' of up to one-half of one percent from the 
annual New Starts and FGM funding levels to finance the retention of 
PMOC services. Given its relative inexperience in the oversight of 
major capital projects, and its use of PMOCs for that purpose, UMTA 
chose to promulgate a limited rule that imposed only a very general 
requirement that the sponsor of a major capital project develop a 
project management plan for that project, and a very general framework 
for the responsibilities of UMTA's PMOCs. That original rule is still 
in effect.
    Today, however, the annual dollar value of the Federal transit 
capital programs is nearly five times the level authorized under the 
STURAA in 1987. The number of active PMOC task orders is more than 
double the number during STURAA. The number of sponsors of New Starts 
across the United States--many of which are new to the transit 
industry--has increased exponentially. There is a compelling need for 
stronger management of fixed guideway modernization projects to help 
restore rail transit infrastructure to a state of good repair. FTA is 
participating in a larger number of ``mega projects''-- projects 
costing one billion dollars or more--which entail significant oversight 
challenges to the agency as the steward of Federal tax dollars. 
Moreover, FTA has become much more knowledgeable about the risks 
inherent in major capital projects, having conducted its own risk 
assessments since 2005, having studied the reasons for cost and 
schedule changes on a good many major capital projects, and having 
witnessed project sponsors' lack of management capacity and capability, 
and appropriate project controls, as discussed below.
    The rule that FTA is proposing today follows the Advance Notice of 
Proposed Rulemaking (ANPRM) the agency published on September 10, 2009, 
at 74 FR 46515-21. This proposed rule would transform the current, 
narrow rule for project management oversight to a discrete set of 
managerial principles for sponsors of major capital projects; enable 
FTA to more clearly identify the necessary management capacity and 
capability of a sponsor of a major capital project; spell out the many 
facets of project management that must be addressed in a Project 
Management Plan; change the applicability of the rule from one based 
primarily on total project costs to one based primarily on the amount 
of Federal financial assistance for a project; tailor the level of FTA 
oversight to the costs, complexities, and risks of a major capital 
project; set forth the means and objectives of FTA risk assessments; 
and more clearly articulate the roles and responsibilities of PMOCs. 
What follows is a discussion of the comments on the ANPRM, FTA's 
responses to those comments, and a section-by-section description of 
the proposed rule and what FTA expects to accomplish through each 
section.

Comments Received on the ANPRM and FTA Responses

    FTA received comments from twenty-one (21) entities, including 
seventeen (17) transit agencies, one (1) project management oversight 
contractor, and three (3) private not-for-profit organizations. FTA 
will address the comments in groups, by subject matter.

Shift from `Project Oversight Only' to `Project Management and 
Oversight'.

    Comments: In FTA's proposal to shift the focus of its Project 
Management Oversight (PMO) rule from ``project oversight only'' to 
``project management and oversight,'' many commenters stated that 
project management is not an appropriate Federal role. They stated that 
the shift would require more resources for FTA and that the overlay of 
the FTA project management processes may complicate project delivery 
and costs. Commenters also asserted that experienced sponsors already 
use the project management strategies proposed in the ANPRM. One 
commenter questioned whether FTA has the data and authority to support 
extending these requirements beyond inexperienced sponsors. Another 
commenter countered with the view that some sponsors have long shown 
problems with management capability and project controls and that even 
those that develop good Project Management Plans (PMPs) often fail to 
follow those plans. One commenter questioned whether the statute allows 
FTA to specify project management requirements.
    FTA Response: FTA has no role whatsoever in a sponsor's hands-on 
management of a project. Rather, the FTA role is to oversee the 
effectiveness of a sponsor's project management. As the steward of the 
Federal funds that help finance these major capital projects, FTA is 
obliged to protect the taxpayer. The regulations FTA is proposing today 
are designed to ensure that sponsors of major capital projects possess 
resources and attributes necessary to successfully manage their major 
capital projects; that FTA has the means necessary to oversee the 
Federal investment in those projects; and that there are clear 
expectations of the PMOCs. Over the past several years, FTA has 
observed a number of characteristics of successful project management 
and is using this rule to establish them as minimum expectations for 
sponsors of major capital projects. Also, FTA has ample data to support 
the need for this rule. The types of problems the rule is meant to 
address are described in detail, below.
    The plain text of 49 U.S.C. 5327(e) authorizes FTA to conduct 
oversight of major capital projects, and to promulgate regulations for 
that purpose. Further, the statute obliges FTA to codify a definition 
of ``major capital project,'' and 49 U.S.C. 5327(c) enables FTA to 
obtain the services of Project Management Oversight Contractors (PMOCs) 
to assist the agency in overseeing the expenditure of Federal financial 
assistance for major capital projects--both under the discretionary 
Major Capital Investment (``New Starts'') program and the formula Fixed 
Guideway Modernization (``FGM'') program authorized by 49 U.S.C. 5309.
    Clearly, in authorizing FTA to approve or disapprove Project 
Management Plans, per 49 U.S.C. 5327(a) and (b), the Congress expects 
FTA to make judgments about the merits of those plans. Congress does 
not expect FTA to approve or disapprove plans arbitrarily or to reduce 
the qualitative assessment of Project Management Plans to mere 
checklists. In this proposed rule, FTA is making explicit and 
transparent the criteria by which FTA will determine whether a Project 
Management Plan merits approval. FTA expects this proposed rule to 
assist sponsors in developing and executing Project Management Plans of 
high quality. To the extent that some sponsors already use the project 
management strategies FTA looks for, the proposed rule will not be 
burdensome for them; indeed, their current practices attest to the 
validity of the proposed regulations.

Fixed Guideway Capital Projects Versus Major Capital Projects

    Comments: In the ANPRM, FTA proposed to apply this rule to two 
categories of projects--fixed guideway capital projects and major 
capital projects--with greater oversight being applied to major capital 
projects. Many commenters perceived this as an attempt by FTA to extend 
the reach of its oversight and to take more control of

[[Page 56365]]

local project management processes, leading to increased project costs 
and delays. Some questioned whether the statute allows FTA to specify 
project management requirements for non-major capital projects. Others 
suggested that FTA grandfather any project, already underway, which did 
not meet the definition of a major capital project, such that it would 
be exempt from the regulations. One commenter said no distinction 
should be made between types of projects or past experience of a 
project sponsor; rather, sound project management practices are good 
for all projects and all project sponsors.
    FTA Response: These proposed regulations will apply only to 
projects designated as ``major capital projects'' under the proposed 
definition. Therefore, the proposed rule will not apply to fixed 
guideway capital projects unless they fall within the definition of 
major capital projects. Nonetheless, the project management principles 
identified by this NPRM reflect good practices that are germane to all 
capital projects, large and small; therefore, FTA encourages all FTA 
grant recipients to follow these principles in managing their capital 
projects.

    Note:  The current regulation at 49 CFR part 633 uses the term 
``recipient'' to connote a recipient of FTA grant funds for a major 
capital project. In this preamble FTA is using a broader term, 
``sponsor,'' to encompass not only grant recipients but those 
project sponsors that seek or intend to seek FTA grant funds but 
have yet to receive any FTA grant funds. Moreover, the de facto 
sponsor of a major capital project and the recipient of an FTA grant 
for a project are not always one and the same. Nonetheless, it is 
only a ``recipient'' which enters into a grant agreement with FTA, 
thus, the text of the proposed rule uses the term ``recipient.'' As 
a practical matter, the terms are interchangeable.

    The proposed regulations, together with other steps FTA is taking, 
are intended to reduce or eliminate delays in project development that 
have occurred in connection with some aspects of project risk 
assessments. From FTA's vantage, the most serious delays are 
attributable to sponsors' lack of understanding of the risk assessment 
process, incomplete submittals, or poor quality submittals. The 
proposed regulations, technical assistance provided at FTA's Annual New 
Starts Engineering Workshop, and a new guidance document called A 
Grantee's Guide to FTA's Risk Assessment Process, which FTA plans to 
issue in the near future, will provide every project sponsor with 
opportunities to thoroughly understand FTA's risk assessment process 
and better prepare to participate in the process. Moreover, FTA expects 
the risk assessments to occur concurrently with a sponsor's project 
development, thus, they should not lengthen the schedule or delay the 
Federal financing for a major capital project.
    It is FTA's tentative view that the project management rule should 
not allow for a project to be grandfathered from the rule. FTA has 
every confidence, however, that the promulgation of a final rule will 
not impede either a New Starts or Fixed Guideway Modernization project 
already underway when the rule is promulgated.
    Readers may be interested in a September 2010 report on FTA's 
project management oversight program by the United States Government 
Accountability Office (GAO), which examines the benefits of FTA's 
approach to project management oversight, challenges FTA faces in 
conducting that oversight, and FTA's use of both PMOCs and Financial 
Management Oversight Contractors to help the agency meet its oversight 
responsibilities. GAO-10-909, Public Transportation, ``Use of 
Contractors is Generally Enhancing Transit Project Oversight, and FTA 
is Taking Actions to Address Some Stakeholder Concerns.'' Among other 
matters, the GAO report notes recent PMOC contributions to ensuring 
that PMPs are accurate, and complete; also, that the PMOCs' 
participation in risk assessments has helped identify risks that 
threatened the budgets of major capital projects.

Major Capital Project (Definition)

    Comments: FTA presented three categories of major capital projects 
in the ANPRM, essentially: (1) New Starts projects; (2) Fixed Guideway 
Modernization projects costing $100 million or more; and (3) projects 
designated as major capital projects at the discretion of the 
Administrator. FTA also presented an expanded list of circumstances 
under which the Administrator could designate a project a ``major 
capital project.'' Many commenters disagreed with the precepts by which 
the Administrator might deem a capital project ``major.'' Some objected 
that the proposed criteria are ambiguous and subjective, giving FTA too 
much latitude to designate projects as ``major.'' Conversely, one 
commenter suggested that FTA omit the dollar threshold and use only the 
proposed criteria to which others objected. Some commenters objected to 
the use of any fixed dollar threshold. One commenter also suggested 
that FTA should focus this proposed rule on projects that expand a 
sponsor's fixed guideway system. Commenters further recommended that 
FTA use a risk-based approach to defining a major capital project; 
escalate the $100 million cost threshold for identifying a major 
capital project; and base FTA's level of oversight on the proportion 
Federal funding bears to the total project costs. Another commenter 
recommended that the project management regime discussed in the ANPRM 
should be extended to all capital projects, regardless of size or 
complexity.
    FTA Response: FTA considered all of these recommendations. Today, 
the agency is proposing that a ``major capital project'' be defined as 
a project that meets either of two conditions:
    (i) Any capital project for which the sponsor seeks $100 million or 
more in Federal financial assistance under either the Major Capital 
Investment or Fixed Guideway Modernization programs authorized by 49 
U.S.C. 5309. (Note that in the current rule, the threshold is $100 
million in total project cost.)
    (ii) Any capital project the Administrator finds would benefit from 
the FTA project management program, given the size or complexity of the 
project, the uniqueness of the technology, the previous project 
management experience of the sponsor, or any other risks inherent in 
the project. (Note: This definition does not include routine 
acquisition, maintenance, or rehabilitation of rolling stock as 
specified both in statute and in the current rule.)

Technical Capacity and Capability

    Comments: FTA stated in the ANPRM its minimum expectations for a 
sponsor to demonstrate technical capacity and capability. Commenters 
strongly supported the idea that sponsors must have ``core 
competencies.'' Several commenters suggested that a requirement for 
demonstrating technical capacity and capability through a PMP should 
not apply to Fixed Guideway Modernization projects, however. Some 
suggested that FTA consider a sponsor's experience and size, among 
other things, in determining the level of oversight of technical 
capacity and capability required for a major capital project. Others 
argued that the submittal of a staffing plan to FTA or simply self-
certification of technical capacity should suffice.
    FTA Response: In rule proposed today, FTA would explicitly require 
a sponsor to demonstrate that it possesses the management capacity and 
capability to successfully implement its proposed project. It must be 
emphasized, the proposed requirement for management capacity and 
capability is broader than

[[Page 56366]]

the requirement that a recipient possess the technical capacity and 
capability necessary to carry out the scope of work under an FTA grant, 
which applies to any type of grant under the Federal Transit programs 
authorized by 49 USC Chapter 53.
    Moreover, the argument that self-certification and FTA's ordinary 
progress reviews would suffice as evidence of a sponsor's technical 
capacity and capability inappropriately discounts the seriousness and 
consequences of the schedule delays and cost overruns that have 
occurred on past projects for which grant recipients self-certified. 
Experience has shown that those practices do not provide sufficient 
protection for the Federal funds invested in major capital projects. 
Certainly, FTA acknowledges that there are opportunities to tailor, and 
in some cases streamline, its oversight process to the size and 
complexity of a major capital project, as well as to a sponsor's past 
performance. However, as with any financial investment, a sponsor's 
past performance is not a guarantee of future results. The persons, 
processes, or even the organizational elements responsible for past 
successes may be gone. Moreover, as one commenter noted, a sponsor may 
possess the requisite expertise, but may not assign the individuals 
having it to the major capital project in question or may spread those 
individuals too thinly over too many projects. Likewise, a sponsor's 
successful experience with one particular approach to project 
development does not guarantee success under a different development 
approach. If a sponsor still has the capabilities and resources 
responsible for past success on a similar project and will devote them 
to the major capital project in question, FTA's review will be faster 
and easier. Before awarding Federal funding for the development of a 
major capital project, however, FTA must determine that the sponsor has 
sufficient capacity and capability to manage the scope of work for a 
Fixed Guideway Modernization or the appropriate phase of a New Starts 
project. While all organizations possess some degree of management 
capacity and capability, a given organization may need to enhance its 
management capacity and capability to meet the thresholds for a major 
capital project, given the constraints and risks of that particular 
project.

Project Management Plan (PMP)

    Comments: In the ANPRM, FTA suggested that a sponsor be required to 
submit a formal and documented Project Management Plan (PMP) setting 
forth its policies, practices, and procedures; to secure FTA's 
approval, the PMP would have to explain in sufficient 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.
    Several of the commenters suggested that a PMP be scaled based on 
project size and type. One commenter liked the idea of an integrated 
PMP that is modular, but believed it necessary for major capital 
projects, only. Some thought PMPs unnecessary for state of good repair 
projects regardless of size or complexity. Some commenters requested 
that FTA provide better guidelines for the development of PMPs. Others 
stated that the current rule does not and need not allude to sub plans 
under the PMPs. Another commenter strongly supported FTA's proposed 
emphasis on the PMP, while recommending that all sub plans be 
consolidated, the process be simplified, and FTA should act to ensure 
that a sponsor adheres to its PMP.
    FTA Response: The proposed rule provides that PMPs will be required 
only for major capital projects as defined in this rule. Furthermore, 
PMPs will be scaled, based on project size and complexity. It is clear, 
however, that PMPs are effective management tools for any capital 
project. A PMP should provide for a series of project-specific 
performance measures that a sponsor can report against. This NPRM 
specifies a set of core contents for PMPs plus other requirements that 
are project-specific. Sub Plans are defined in the proposed rule to 
mean a document either within or related to a Project Management Plan 
which addresses a specific discipline or managerial practice for the 
purposes of planning and managing a major capital project.

Project Implementation Checklist

    Comments: In the ANPRM, FTA noted the agency has developed 
checklists that sponsors of New Starts projects can use as quick 
reference guides to evaluate and monitor their readiness to be approved 
into the next phase of the New Starts project development process. FTA 
proposed to create new checklists for all major capital projects as 
guides to project implementation. Many commenters disagreed that 
checklists are helpful and suggested, instead, that FTA formulate 
standard formats and data requirements to be filled out by transit 
agencies sponsoring major capital projects. These commenters also 
stated that the readiness evaluation process slows sponsors' receipt of 
Federal funds, and noted that only New Starts and Small Starts have a 
structured series of FTA approvals specified in law. Conversely, 
another commenter thought consolidation and simplification of the 
checklist would be very helpful. One commenter thought checklists are 
useful for high-risk projects, and that the checklists should be as 
demanding as possible but sufficiently flexible to prevent a project 
from stalling over an unnecessary detail.
    FTA Response: This proposed rule limits application of the 
readiness evaluation criteria to enter a subsequent phase in project 
development to New Starts and Small Starts projects. FTA intends is to 
work with New Starts and Small Starts sponsors early in project 
development to make the readiness evaluation criteria very clear to the 
sponsors, and to speed up the approval process.

Reporting

    Comments: In the ANPRM, FTA proposed specific reporting 
requirements for sponsors 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. Some commenters requested 
clarification of these proposed requirements, and some suggested that 
FTA's TEAM grants management system be used for reporting. Another 
commenter thought that TEAM would not be optimal because milestones and 
details should be more integrated with the existing system of periodic 
reports and go deeper into detail than the level of reporting in TEAM.
    FTA Response: This proposed rule clarifies the content of a PMP and 
its specific Sub-Plans for addressing critical aspects of project 
implementation. The NPRM further specifies monthly reporting 
requirements. In the near future, FTA will issue an update of its 
Project and Construction Management Guidelines, as well as its project 
management oversight procedures, which contain information on most of 
the requirements pertaining to oversight and project management.

Consideration of Past Performance

    Comments: In the ANPRM, FTA raised the possibility of relaxing 
requirements for sponsors who have successfully completed other major 
capital projects within the past seven to ten years. To illustrate, if 
a sponsor could demonstrate that it has retained its most critical 
resources, such as the project manager; that the sponsor

[[Page 56367]]

organization's business processes and procedures have not been 
significantly altered; and that the project involves the same or 
similar technology, FTA could relax the requirements accordingly. The 
majority of commenters agreed with this approach and also suggested 
that the risk of the project be considered in determining the level of 
FTA oversight. A handful of commenters expressed a concern that this 
approach may not be consistently applied across projects and FTA 
Regional Offices, and that past performance does not guarantee future 
success. One commenter opposed the proposed approach, arguing that 
practices seven to ten years old are obsolete, and that all recipients 
should be held accountable to a consistent set of standards.
    FTA Response: The proposed rule would make project risk one of the 
factors considered in determining the level of oversight required of a 
project. FTA will make every effort to ensure that the criteria to 
assess past performance are fair and consistent. Past performance will 
include making sure that previously implemented projects and any new 
project are similar in nature and that key personnel and practices are 
still available to manage the new project. FTA will consider, 
specifically, the level of complexity of the project, the amount of 
Federal financial assistance the sponsor seeks for the project, and the 
sponsor's past performance in managing its major capital projects.

Oversight of Major Capital Projects

    Comments: In the ANPRM, FTA stated that the need for oversight has 
increased even faster than the available Federal funding because the 
growth in FTA's programs has generated both higher demand and more 
complex projects. Some commenters expressed concern that an expansion 
of the FTA oversight role would be inconsistent with FTA's intention to 
streamline project development under the New Starts program. Some 
expressed concern whether enhanced oversight would strain FTA's scarce 
resources. Some suggested that FTA's level of oversight should be based 
on the proportion of Federal investment, project complexity, or 
technical expertise of the project sponsor. Some commenters also said 
they would welcome early PMOC involvement in major capital projects, 
but noted that some of the PMOCs are not very experienced, and there 
remains a lack of consistency in the PMOC process. Also, some 
commenters asserted that FTA oversight activities are too detailed, and 
duplicative, in some cases, if one considers triennial reviews, annual 
and biennial certifications, and other FTA program reviews.
    FTA response: FTA works continually to improve its oversight 
processes. Expanding FTA oversight in the ways FTA proposes need not 
slow the development of major capital projects or compromise 
efficiency, nor is it inconsistent with FTA's goal of streamlining the 
New Starts process. As mentioned above, a recent report by the GAO 
identifies a number of actions FTA has taken to improve its project and 
financial management oversight of New Starts projects. Both the GAO and 
the U.S. Department of Transportation's Office of Inspector General 
have identified challenges FTA faces in providing effective oversight 
of particularly large and complex major capital projects. Furthermore, 
FTA has initiated a top-to-bottom review of its oversight policies, 
procedures, and management practices to further improve its oversight 
programs. This includes, specifically, enhancing FTA's risk-informed 
PMO program to ensure robust oversight and monitoring of complex 
capital projects requiring a significant amount of Federal funding or 
having inexperienced project sponsors, while at the same time seeking 
opportunities to streamline the oversight of less costly projects being 
undertaken by experienced sponsors, and making all oversight more 
efficient and consistent. FTA has already started working with sponsors 
to ensure early involvement and will assign PMOCs to match the project 
complexity and its challenges. Also, FTA emphasizes that the definition 
of major capital projects in this proposed rule would be based 
principally on the amount of Federal funding a sponsor seeks for its 
project.

Risk-Informed Project Management Oversight Approach

    Comments: In the ANPRM, FTA observed that, over the past several 
years, the agency has increased its use of risk assessments, risk-
informed management, and risk mitigation strategies to ensure that 
major capital projects are constructed on time and within budget, while 
delivering the promised project benefits. FTA relies on a portfolio of 
risk management tools to prevent project costs from escalating. In 
general, the comments on the ANPRM suggested that risk assessment 
should be more in the form of technical assistance designed to enable 
project sponsors to take greater ``ownership'' of the process. Some 
commenters argue that risk reviews should be relaxed for those project 
sponsors capable of performing their own assessments. Others believed 
that PMPs should be developed much earlier in the life of a project, 
and that risk assessments preceding preliminary engineering on New 
Starts projects should concentrate on identifying potential risks for 
that type of project, developing possible mitigation strategies, and 
determining key project milestones. One commenter urged that FTA not 
overemphasize risk to the exclusion of other relevant project 
management and oversight criteria.
    FTA response: FTA does not see technical assistance as a sufficient 
substitute for the risk assessment and risk management approach set 
forth in this proposed rule. Obviously, it is desirable for the agency 
to provide some form of technical assistance in conjunction with risk 
assessments and risk reviews. This may take the form of suggestions or 
recommendations for ways to overcome deficiencies disclosed by an 
assessment or review. FTA already does this as resources and time 
permit. Certainly, FTA agrees that a PMP early in the life of a project 
would be useful to local management of the project development process. 
FTA also agrees with the suggested scope of risk assessments preceding 
preliminary engineering on New Starts projects, which is consistent 
with current practice in the New Starts program. Indeed, over the past 
several years, FTA has gained a great deal of experience in risk 
assessment, such that the agency is better able to perform a risk 
assessment at a level commensurate with the nature and characteristics 
of a major capital project. This experience now provides the means for 
explicit project execution planning, tools for risk mitigation and 
management, and allocation of costs and schedule contingencies, as 
appropriate. FTA's basic methodology for conducting risk assessments, 
whether done by FTA or the project sponsor, is set forth in the 
Appendix to the proposed rule.

Procurement of PMOC Services

    Comment: One commenter argued that FTA should use only a 
qualification-based selection process for obtaining PMOC services.
    FTA response: The procurement methods FTA uses to retain services 
from PMOCs are outside the scope of this rulemaking.

Structure of the Proposed Rule

    FTA is proposing a significant revision and restructuring of the 
rule at 49 CFR Part 633. Under the proposed rule, there would be three 
subparts and a single appendix. Subpart A (``General Provisions'') 
would address the purpose of the rule, the definitions of certain 
terms, the applicability of the rule, and

[[Page 56368]]

FTA's rights of access to information. Subpart B (``Recipients' 
Responsibilities for Project Management'') would set a number of 
fundamental requirements for establishing a sponsor's management 
capacity and capability; specify the subjects that must be addressed in 
a sponsor's Project Management Plan; establish special requirements for 
certain projects based on cost, complexity, or risk; and spell out a 
sponsor's obligations to carry out all the particulars of its project 
management plan, report current data on budget and schedule, and meet 
with FTA and FTA's PMOCs on a quarterly basis. Subpart C (``FTA Project 
Management Oversight'') would present the principles of FTA project 
management oversight, describe the various uses of PMOC services, 
delineate the roles and responsibilities of PMOCs, address FTA's 
requirement for risk assessments, and specify the circumstances in 
which FTA may increase its oversight of a major capital project, based 
on the cost, complexity, or risks of that project. Additionally, in an 
Appendix to this proposed rule, FTA would set forth the basic 
methodology used for conducting risk assessments on major capital 
projects as it deems necessary or prudent.
    The following is a section-by-section analysis of each proposed 
rule:

Section-by-Section Analysis

Section 633.1 Purpose.

    This section explains the mandate of 49 USC 5327(e) to perform 
oversight to both the Major Capital Investment and the Fixed Guideway 
Modernization programs authorized by 49 USC 5309.

Section 633.3 Definitions.

    This section sets forth the definitions of some key terms 
applicable to this rule. This section would establish new definitions 
in the rule for ``Project Management Oversight Contractor,'' ``risk,'' 
``sub plan,'' and ``management capacity and capability.'' Also, this 
section would amend the current definitions for ``major capital 
project,'' ``project management oversight,'' and ``project management 
plan.''
    By definition, a `major capital project' will be a project using 
$100 million or more in Federal financial assistance under either the 
Major Capital Investment or Fixed Guideway Modernization programs 
authorized by 49 U.S.C. 5309, or any capital project the Administrator 
finds would benefit from the FTA project management program. Thus, the 
proposed change to the definition of ``major capital project'' entails 
a fundamental shift, as follows: The current definition at 49 CFR 633.5 
is based on total project costs of $100 million or more, but the 
proposed definition would be based on a total amount of Federal funding 
of $100 million or more from programs under 49 U.S.C. 5309. FTA 
believes it more appropriate to apply the rule to any given project 
based on the level of Federal investment in that project, as opposed to 
the total costs of the project.
    The proposed changes to the definitions of ``project management 
oversight'' and ``project management plan'' are simply for clarity.
    Insofar as ``project management oversight,'' however, readers 
should be aware that FTA uses the term to connote the activities of 
both the agency and its PMOCs in all of the following: First, the 
activity of continuously assessing a project to evaluate its readiness 
for further project development, up through the point where FTA 
determines whether the project is ready for a grant award, based on 
sufficient confidence that the scope, costs, benefits, and impacts are 
firm and final. Second, the activity of making ongoing determinations 
whether the sponsor has the management capacity and capability 
necessary to carry out a project efficiently, and effectively; the 
effectiveness of the sponsor's project delivery; and whether the 
project is on time, within budget, and built to approved plans and 
specification, consistent with all applicable Federal requirements. 
Third, the activity of ensuring that a sponsor's management processes 
are based on sound decision making, driven by a thorough understanding 
and implementation of well documented, risk-informed project management 
practices.
    Since the original rule was issued more than 20 years ago, a number 
of disciplines have developed as best practices in the transit 
industry, including risk and contingency and rail fleet management 
plans. Other disciplines are now required by law, including, notably, 
safety and security management plans. Thus, instead of requiring an 
all-inclusive project management plan, FTA proposes to institutionalize 
its practice of permitting sponsors to address these different 
disciplines in `sub plans.' The proposed definition of ``sub plan'' 
reflects the use of that term throughout the industry.
    FTA framed the proposed definition for ``risk'' based upon the 
agency's experience in conducting various types of risk assessments for 
major capital projects over the last several years, including the Lower 
Manhattan Recovery projects and several New Starts projects entailing 
tunneling with geotechnical risks. The proposed definition is also 
consistent with the approaches to ``risk assessment'' taken by other 
governmental agencies in the fields of human health, nuclear power, 
defense, security, and other forms of public works. The study of risk 
is a broad subject. It can be applied to a sponsor's entire 
organization, or the many functions and levels of an organization, or 
specific functions, projects and activities. See, e.g., International 
Organization for Standardization (ISO), ISO/FDIS 31000:2009, 
Introduction. As a Federal grant agency making investments of taxpayer 
funds, FTA must examine a sponsor's management capacity and capability 
at all these levels in assessing risk.
    For that very purpose, FTA is proposing a definition of 
``management capacity and capability'' to capture the point that while 
every sponsor must have the underlying technical capacity and 
capability to carry out a project, for a major capital project, the 
sponsor's ability to deliver the project on time and within budget is 
driven by the robustness of both (a) its ``management capacity,'' which 
consists of the authority and resources of the project team, and (b) 
its ``management capability,'' which reflects the additional authority 
and resources the sponsor is able to call upon as necessary to deliver 
the project. These points are discussed further below.

Section 633.5 Applicability.

    This section would amend the current rule at 49 CFR 633.11 
(``Covered projects'') by omitting the obsolete legal citations in the 
current section 633.11, and extending the rule to all major capital 
projects funded from any source under 49 USC Chapter 53, including 
those major capital projects using Chapter 53 funds that originate 
under the Surface Transportation Program (STP) or the Congestion 
Mitigation and Air Quality Program (``CMAQ'') authorized by the 
Federal-aid highway statutes.
    Readers should note, moreover, that in his or her discretion, the 
Administrator could designate a Small Starts project as a major capital 
project subject to these requirements.

Section 633.7 Access to Information.

    This section would make a minor change to the current rule at 49 
CFR 633.15, but it would also recognize a preferred practice among FTA 
and many sponsors of major capital projects regarding the custody and 
control of documents and data that sponsors may wish to withhold from 
disclosure to third parties. Specifically, this section

[[Page 56369]]

would allow FTA and its PMOCs to decline custody or control of 
documents which are or may be at issue in litigation between project 
sponsors and third parties.

Section 633.9 Project Management Capacity and Capability.

    All organizations that sponsor transit projects are capable of 
carrying out their projects with some degree of efficiency and 
effectiveness. To some degree, all of them are capable of managing 
risk. There is a fundamental linkage, however, between the experience 
of a sponsor's project ``team'' and the risks of a project. The 
experience level of a project team can increase or mitigate the risks 
of a project. Changes in the membership of a project team or the 
competency levels of acquired team members can precipitate changes to 
the schedule for a project, or the duration or particular project 
activities. See, e.g., Project Management Institute, Body of Knowledge 
(2004), Ch. 11.
    This NPRM would establish an explicit link between the 
organizational performance of a project sponsor and the management 
capacity that is necessary to complete project activities. FTA is 
convinced that deficits in management capacity impair organizational 
performance and expose a major capital project to increased risk of 
negative consequences for costs and schedule. Clearly, a sponsor's 
project team requires certain minimum skills and competencies, 
delegated authorities, explicit accountabilities, and assigned 
resources to accomplish a project, which can be defined as ``management 
capacity.''
    Experience demonstrates, moreover, that the successful completion 
of a major capital project requires more than a minimum management 
capacity; it requires that the sponsor organization have the ability to 
both oversee the project team and provide additional support and 
resources, as necessary, to address emerging problems, or issues not 
identified in the original constraints or assumptions. FTA 
characterizes this as ``management capability.'' This NPRM would 
require the sponsor of a major capital project to possess both 
management capacity and management capability.
    The greater the risks associated with the constraints or 
assumptions of a project, the greater the demand for management 
capacity and capability, and the higher the thresholds for managing the 
project and mitigating risk. At each stage of the process of project 
development--and prior to awarding a grant of Federal funds--FTA must 
determine whether a sponsor possesses the necessary management capacity 
and capability to accomplish that phase of the project or the purpose 
of that grant. If FTA finds that a gap exists in a sponsor's management 
capacity and capability, the sponsor must demonstrate, with 
documentation, an approach to acquiring the means to close the gap 
within an acceptable timeframe.
    Likewise, from the earliest moments of developing a major capital 
project, a sponsor must balance the authority and resources allocated 
to that project against any competing priorities, and retain the 
ability to mobilize additional resources, as necessary. Specifically, 
the project team must have the sufficient delegated authority and 
resources to manage the activities to be accomplished at each 
successive phase of the project. Yet the project team must be 
explicitly accountable to the sponsor for its exercise of delegated 
authority and its use of allotted resources. The project team must also 
be responsible for reporting and elevating issues to higher management 
of the sponsor's organization--such as a chief executive officer and 
board of directors--in a manner that is both professional and ethical.
    Many readers will be familiar with the term ``technical capacity,'' 
or ``technical capacity and capability''--which is a subset of 
management capacity and capability. By law, a recipient of a grant 
under any of the FTA programs authorized by 49 U.S.C. Chapter 53 must 
have the legal, financial, and technical capacity to carry out the 
project that is the subject of that grant. In itself, of course, the 
absence of any key technical skill or the inadequacy of a technical 
process could lead to significant cost overruns and schedule delays. 
For example, the lack of geotechnical expertise for a tunnel project, 
or lack of real estate savvy on a project requiring large amounts of 
real estate acquisition could seriously jeopardize a project's budget 
or schedule, or both. And the requisite technical capacity and 
capability might differ in some aspects from project-to-project or even 
phase-to-phase within the same project. For example, some of the 
expertise required to successfully manage a light rail project will not 
be required for bus rapid transit. Similarly, some of the skills 
necessary for the construction phase of a project will differ from 
those needed for the earlier design phase of that same project. 
Nonetheless, good management is an underlying necessity regardless of 
the mode of transit, or phase of development, or the technical capacity 
a sponsor may possess. From the very beginning of a project, a sponsor 
must develop and maintain the expertise, processes, and procedures 
necessary to successfully implement and manage the project at each 
stage of planning, engineering, design, and construction.
    In summary: Unlike the current rule at 49 CFR part 633, this NPRM 
would clearly establish FTA's expectations for management capacity and 
capability of sponsors of major capital projects. In effect, FTA would 
codify the skills and practices a sponsor must acquire and maintain to 
successfully deliver a major capital project. While the proposed rule 
would cover major capital projects, only, FTA is convinced the 
requirements of proposed section 633.9 are germane to any capital 
project, and encourages sponsors to follow these principles in managing 
all their capital projects.

Section 633.11 Project Management Plan: Contents

    The Project Management Plan (PMP) is altogether critical to 
successful management of any major capital project, throughout the 
development and implementation of that project. The PMP and its sub 
plans further enable the sponsor's staff to effectively manage the 
scope, budget, schedule, and quality of the project through a set of 
common objectives, while managing the safety and security of the 
public.
    The proposed rule would provide for the scaling of the PMP to match 
the nature and characteristics of the project. It identifies core PMP 
requirements and states that depending on the characteristics of the 
project, additional requirements may apply. For example, the management 
of any major capital project benefits from the establishment of 
comprehensive and critical path-driven project schedules, as well as 
strong document control procedures and procedures for managing 
contractor performance. The proposed regulatory text would 
institutionalize FTA's risk-informed project management oversight 
process, and addresses risk and contingency management sub plans as 
core PMP requirements. On the other hand, real estate management sub 
plans would be required only when the acquisition of real estate is 
necessary to implement a project.
    Note that many disciplines can be addressed in separate sub plans, 
as discussed above. FTA recognizes that some project sponsors have in-
house project management tools, so the proposed rule would allow for 
the sponsor to incorporate by reference its plans, programs, and 
procedures already in existence which address the various PMP 
requirements.

[[Page 56370]]

Section 633.13 Special Requirements Based on Project Cost, Complexity, 
or Risk

    Over the years the industry has forcefully asserted that not all 
sponsors are alike, nor are all projects alike, thus, FTA should take 
individual circumstances into account when applying its requirements 
for project management. FTA agrees. This section is proposed in direct 
recognition of that approach. Simply put, while Section 633.11 already 
recognizes that the PMP for any project has certain core components, 
there are other components that only apply in certain circumstances. 
The Administrator will review the sponsor's management capacity and 
capability, the complexity and risk of the project, the sponsor's 
experience implementing similar types of projects, and, based on that 
review, can impose additional requirements the sponsor must address in 
its PMP. The Administrator may then require the sponsor to report its 
progress in meeting those special requirements as well as to forecast 
whether the project will stay on schedule and on budget. This would be 
a targeted approach, based on individual circumstances, after a careful 
analysis. It is not and would not be the normal practice. Thus, while 
the proposed rule requires every sponsor to have in place basic 
management systems, it also recognizes that in certain circumstances, 
because of the nature of the investment or the sponsor's own experience 
level, additional management capacity and capability may need to be put 
in place to ensure that a project is delivered on time and on budget.
    More important, these additional requirements are intended to be 
developed early enough that they can make a difference in how well the 
project is managed. These are not ``cookie cutter'' solutions; rather, 
they will be specific to the sponsor's structure and project approach. 
These requirements will also help the sponsor ensure that decisions 
about the project will be made based on the best information available 
at the time; in an open, transparent, informed manner; at the 
appropriate management level; and documented in a manner that can be 
reconstructed by third parties.
    This particular provision in the NPRM reflects two corollary 
lessons learned by FTA in the 22 years since the agency issued the 
current regulation. First, any problems in implementing a project must 
be recognized and addressed as early as possible. The proposed rule 
would oblige a sponsor to anticipate a problem and have a solution 
already in place should the problem arise. Second, the proposed rule 
recognizes that if projects experience significant problems, unless the 
problems are recognized and addressed promptly by the sponsor, the 
range of options for solving the problems narrows rapidly, and may 
disappear altogether. Therefore, this proposed rule focuses on the need 
for the sponsor to track and forecast whether the project is, and is 
expected to stay, on schedule and within budget, to identify and 
develop immediate and effective solutions to remediate problems related 
to schedule and budget, and to report this information to FTA with the 
understanding that FTA will use this information in making funding 
decisions, even with respect to approving an annual increment of 
committed New Starts funds. At heart, these proposed requirements are 
intended to help FTA and project sponsors meet their stewardship 
responsibilities to guard against waste and misuse of taxpayer funds.
    The fundamental basis for these requirements is substantiated by 
research. In 2005, an FTA-sponsored study on cost overruns on transit 
projects, primarily light rail new starts projects (Analysis of Capital 
Cost Elements and Their Effect on Operating Costs, NTIS report no. FTA-
NY-26-7000), https://www.utrc2.org/research/assets/107/utrc-2005-fta1.pdf, noted in its introduction that cost overruns are a common 
phenomenon because ``[a]s projects are developed, costs rise as 
projects become more complex, unforeseen conditions are encountered, 
and delays erode the real value of the original budget.'' The study 
concluded in Section 2.1 that several factors contributed to overruns, 
including ``[s]ystematic underestimation, including the failure to 
adequately assess risks, foreseeable adverse conditions, and the full 
range of project cost components.'' An internal FTA study on risk 
management performance included an evaluation of forecasted versus 
actual performance for several projects and concluded that 
approximately 50 percent of the cost overruns in selected projects were 
related to poorly managed risk. Finally, in 2006, a TRB report (TCRP 
Project G-07--Managing Capital Costs of Major Federally Funded Public 
Transportation) https://onlinepubs.trb.org/onlinepubs/tcrp/tcrp_w31.pdf, identified a number of possible causes, which are described in 
the examples below, for the industry's inability to accurately 
estimate, manage, and control project costs. These three studies came 
to similar conclusions and reflect FTA's experience over the last 
twenty years of investing in major capital projects. Significant risks 
to major capital projects include:
    Unforeseen engineering and construction complexities: Constructing 
transit projects in dense, older, urban cores may mean rebuilding 
infrastructure over 100 years old. A recent New Starts project was 
constructed above older masonry sewers. The sponsor did not realize the 
contractor would use mass excavation equipment in the street, and the 
heavy equipment collapsed the fragile, underlying utilities. On another 
project, the sponsor assumed that the existing utilities could be 
easily relocated with existing methods for temporary support of older 
cast iron pipe. That assumption was inaccurate. Correcting the 
consequences sharply increased the costs of the project. Another 
project sponsor replacing older storm sewer planned to add tunnel 
discharge to the waste water flow. The sewer had settled, which 
required extensive relaying to handle the planned discharge, all of 
which added to the project costs. Examples abound of problems stemming 
from construction complexity, but one in particular stands out: A 
tunnel portal was fully engineered and reviewed for constructability, 
but the engineers missed the detail that the portal was located in the 
middle of a municipal corporation yard resulting in significant delay 
and a substantial increase in cost. All of these risks were 
foreseeable, and avoidable.
    Relevant costs not included in early estimates: In the early 
implementation of FTA's risk review process there were ``mechanical 
inaccuracies'' in estimates and frequent problems in the integration of 
cost data; this has improved in recent years, however. Another problem 
had to do with escalation in that, as a project advanced, portions of 
the cost estimate remained in earlier year base dollars. Most recently, 
one of FTA's major capital projects went through a protracted process 
towards an amendment of the Full Funding Grant Agreement. About a third 
of the overrun on that project was due to problems in the base estimate 
with earlier data that was not updated as part of the on-going budget 
process. A similar example has to do with indirect costs for 
construction; most sponsors still budget construction indirects on a 
percentage or ``parametric'' basis, even though they often develop 
extensive Division 1 specifications in terms of services, reports and 
personnel. Another problem has been under-budgeting of contractor 
design costs in design/build contracts.

[[Page 56371]]

    Organizational and technical capacity to undertake the project: 
There are two recent examples where a transit agency that had 
successfully executed a number of light rail projects stumbled in 
building a commuter rail project. In a third instance, a transit agency 
that had successfully delivered a project using a traditional sealed 
bid approach ran into cost problems when it attempted a design/build 
project delivery.
    Changes in project scope: For a New Starts project, FTA's 
expectation is that coming out of Final Design, the project scope will 
be well defined and experience relatively few changes thereafter. 
Recent experience has shown that this is not always the case. A number 
of New Starts projects have changed or reconfigured almost half of the 
construction scope before the projects were halfway bid. Often this was 
due to changing market conditions, but, in retrospect, the benefits 
that sponsors received for assuming such risk have been low, at best. 
At worst, not only have there been no benefits, but costs have actually 
increased. A less frequent, but still costly, factor is where the 
physical characteristics of the project have changed. This has happened 
because of problems identified during geotechnical exploration, and 
actual changes in the physical configuration of the project made to 
accommodate stakeholder demands or changes in underlying assumptions.
    Geotechnical: The inability of a sponsor to deal with geotechnical 
issues up front has been shown to increase total geotechnical costs by 
as much as 40 percent and cause months of delays. For example, of seven 
recent projects with a planned total of eleven underground transit 
stations, four stations were moved after entry into Final Design and 
two were moved during construction. These moves were due to issues 
identified when better geotechnical information became available from 
more detailed soil borings during Final Design, which led to both 
additional redesign costs as increased costs from delays to the 
schedules. In one instance, a station had to be moved 90 feet deeper to 
avoid encountering an existing water tunnel. In another instance, the 
sponsor had to lower the tunnel to achieve the necessary rock cover.
    Ability to Define Physical Configuration of a Project: This occurs 
most frequently when a project sponsor determines during Final Design 
or construction that a previously relied upon design standard or 
requirement is no longer valid. In one such instance, a sponsor had 
managed the design of the project based on an assumption that critical 
features of the storage yard and its connections with the mainline were 
determined by the morning peak load. Subsequent to entry into Final 
Design, the sponsor discovered that constrained yard movements and a 
new bridge were needed to accommodate evening peak load, which added 
30% to the contract package costs and delayed the package design by an 
additional eighteen months.

Section 633.15 Project Management Plans: Implementation

    FTA's review and approval of a PMP seeks to verify that a sponsor 
has all the relevant capabilities and resources in place to ensure 
successful management of the project using available best practices. It 
also verifies the sponsor's readiness to move a New Starts project from 
one phase of development to the next, and for other major capital 
projects, the receipt of Federal grant funds. A PMP is a dynamic 
management tool that requires periodic updates as a project transitions 
from one phase to another or as a result of other changes, such as 
turnover in personnel.
    This proposed rule would continue the requirement for monthly 
reporting and clarify other requirements aimed at improving the 
management of a major capital project. Specifically, the proposed rule 
would document the need to report and manage the project, based on a 
risk-informed management process. This would include tracking and 
reporting on cost and schedule contingencies along with known risks to 
the budget and schedule, as well as ongoing or planned efforts to 
mitigate those risks.
    Further, the proposed rule would codify FTA's long-standing 
practice of convening quarterly meetings with major capital project 
sponsors, as deemed necessary. These quarterly meetings--typically 
attended by FTA, its PMOC, and local agency management and technical 
staff--are opportune occasions to analyze the progress of a project and 
identify issues that threaten timely and cost-effective delivery, and 
develop remedies and alternatives to maintain cost and schedule. 
Moreover, in its effort to ensure the implementation of safe rail 
systems, FTA has recently begun to encourage a project's prospective 
state safety oversight agency representative to attend these quarterly 
meetings.

Section 633.17 FTA Project Management Oversight Principles

    The basic oversight framework at 49 CFR part 633 has served FTA 
well, focusing on the assignment of to oversee major capital projects 
and requiring a project sponsor to develop a comprehensive PMP to guide 
the planning and implementation of its major capital project. The 
current rule has helped to protect taxpayer funds and to ensure the 
efficient, effective design, construction, and opening of transit 
projects to revenue service.
    Today, however, FTA is investing in larger and more complex capital 
projects, as compared to those in years past. These more recent 
projects entail greater challenges to the agency as the steward of 
Federal tax dollars. They require further improvements in the ways 
sponsors manage their projects and the FTA program for oversight of 
major capital projects.
    The proposed rule is designed to tailor the FTA oversight process 
for factors such as project complexity, the amount of Federal 
investment, and the experience level of the project sponsor. FTA has 
already started working with sponsors earlier in the project 
development process, and will assign PMOCs to match project 
complexities and challenges. The proposed rule sets forth the 
principles for FTA's project management oversight. It specifically 
establishes and documents FTA's risk assessment practices, the review 
of project management capacity and capability, and the review of 
project readiness. These reviews would ``raise the bar'' as compared to 
the minimal requirements in the current rule, which are limited, 
essentially, to review of the PMP and its implementation.

Section 633.19 FTA Use of Oversight Services

    While FTA's capital programs have grown significantly since 1989, 
its staff size has stayed essentially the same for the past 30 years. 
FTA's PMOCs help fill the gaps between staff resources and both the 
number of major capital projects and the levels of Federal funding for 
those projects. Further, of course, the PMOCs provide specialized 
expertise for the challenges that confront a good many projects. 
Currently, the decision to assign PMOCs to projects is made based on 
the relative complexities of the major capital proj