In a series of projects, began by assessing the financial implications and comparative feasibility of six alternate sites for a long-term embarkation location, then analyzed the financial implications for a new ferry services concession contract using three of the preferred embarkation sites and recognizing a number of changes in operations and requirements for the most environmentally-friendly boats.
We adapted an Excel-based cash flow financial model from our other previous NPS Concession Prospectus Development Support projects, which included eight other ferry concession analyses. We demonstrated how the alternative embarkation scenarios and other contract requirements would impact the franchise fee that the concessioner would be expected to pay the Park Service, recognizing its target internal rate of return commensurate with the projects opportunities and risks. We tested the sensitivity of the concessions’ financial performance to variations in key financial and operating assumptions/parameters.
The analysis was complicated by a number of factors, such as (1) consideration of the marginal expenses associated with the NPS concession operation as being performed in combination with other non-concession services, (2) specifications and costs associated with appropriate future vessels which might differ from those historically used, (3) costs to meet expected future emissions and ADA standards, (4) uncertainties about future alternative embarkation and non-operating mooring sites, maintenance, labor standards, etc. and the associated costs, (5) projecting vessel capital costs, considering costs when boats have been leased from third party entities wholly owned by the concessioner, and (6) making appropriate judgments about key expenses’ fixed and variable components, especially when considering alternative future service origins, schedules and route combinations.