Financial Impact Analysis

What is it? What is new? What does this mean for existing users?


financial impactWhat is it?  Financial Impact Analysis calculates the expected stream of expenditures and revenues associated with a project or program, in order to assess its economic feasibility. The tool portrays both initial “affordability” --in terms of up-front investment required, and ongoing “economic feasibility” –  in terms of year-to-year cash flow to meet ongoing operations, maintenance and debt service requirements. It can provide insight from the perspective of public agencies or private vendors. Financial feasibility is a major consideration in establishing the “business case” for a project (along with consideration of investment efficiency and achievement of strategic economic dev elopement growth goals).

The Financial Impact Analysis module of TREDIS provides an internally consistent narrative about the relationship of financial, economic and benefit calculations. It calculates up-front and ongoing expenditure requirements based on the project cost element of the BCA module, and it calculates local, state and federal revenues based on the population and business growth forecast by the EIA module. It further incorporates a PPP (public-private partnership) table to allocate costs and revenues among public and private sector entities. Results are shown on a year-by-year basis, which makes it possible for users to see disparities in terms of who benefits, who pays, and how cash flow changes over time. This module employs a simplified, “sketch planning” perspective that builds off of long-term averages for annual revenues and expenditures, rather than requiring detailed financial data and local factors affecting incremental costs over time. This makes it ideal for early-stage evaluation of proposals and plans.

What is new?  TREDIS 5 introduces a more flexible assignment of costs and revenues among public and private parties. It now includes an ability to view cash flow on a year-by-year basis. Users can also switch between real (constant) dollars and nominal (actual) dollars. There is an expanded set of reports, which are accessed via a simple format that summarizes results over time, and then enables users to “drill down” to see further details for any single year.

What does this mean for existing TREDIS users?  The expansion of FIA capabilities does not affect results compared to prior versions of TREDIS. However, users will see that expenditures represented in nominal dollars in the FIA report will differ from costs which are represented in real dollars in the BCA report.

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