Orange Country, Florida, is proposing the construction of a light rail project to alleviate traffic congestion, strategically revitalize some depressed areas of Orlando, and promote economic growth. The current political administration also has made available significant federal funding for regional infrastructure projects that eliminate greenhouse gases and conserve fuel.
Unfortunately, resistance from the hotel and resort industries has limited the development to the central businesses of Orlando, the University of Central Florida (UCF), and the Orlando International Airport. The initial proposal under evaluation calls for the construction of four major train stations. Additional stops will comprise this light rail system but will initially be limited to ticketing machines and metered parking. The Orlando Regional Corridor Association (ORCA), consisting of the affected communities, the airport, Orlando proper, and UCF representatives, governs the transit system development. The mandate for the taxpayers is simple: minimize the costs while maximizing convenience. The ORCA has conducted an initial cost analysis of this project. From other contracts, interviews, detailed cost estimates, and so forth, they have estimated the following nonrecurring cost items:
Each of these is being considered as standalone entities because they will be funded from different sources. The trains, maintenance facility, and tracks will be built with federal and state funding, tax increases, and municipal bonds. The hope is that the minor train stations will be built with private investor funding and that charging for parking and retail space will make them viable projects without taxpayer support. The major regional train stations will also be built with private funding, under the assumption that retail, parking, and local property improvements will attract major property developers and investments from the local communities, UCF, and the airport. The CTS will house the central offices for ORCA. Your company is interested in being a part of this program. You have three options:
1. Pursue the development of a CTS.
2. Develop one of the MRTSs.
3. Develop some of the neighborhood train stations. (Assume this will be broken into four contracts with a maximum of ten stations per contract.) Because of political considerations, each one of the projects will be awarded to a different company. Each team will develop a business case for these projects.