SECTION 6
FINANCIAL ANALYSIS
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As such, the Financial Strategy Team would need to agree on the financial metrics
that would be applied for CEAP development
The use of Raleigh-specific information would provide the basis for the most
verifiable, defendable and repeatable analysis of strategies as well as the most realistic
estimates of costs and impacts to City operations
6.2
Second Finance Team Workshop
The goals of the second Finance TeamWorkshop were to:
Develop a method for the Prioritization Team to use to evaluate strategies for
contribution to the Financially Responsible decision criterion
Provide input for Prioritization Team to use to evaluate strategies for contribution to
the Realistic/Implementable decision criterion as related to City’s financial operations
Develop a process that could be used to fill the gaps in the financial information that
was provided by the Strategy Teams, in order to conduct the financial evaluations
6.2.1
Information for Prioritization Team
One of the five decision criteria for use in scoring potential strategies was “Financially
Responsible”, defined as the “good use of public funds; considers capital and operating
expenses; expressed by some form of a benefit-cost analysis, payback analysis, net present
value, and/or initial capital outlay.”
The Finance Team developed additional information to refine the definition of the criterion
in enough detail to be applied by the Prioritization Team during the strategy scoring
process. The Finance Team validated qualitative, planning level financial descriptors to be
utilized for prioritization as shown in Exhibit 12:
EXHIBIT 12
Qualitative Planning Level Financial Descriptors for Strategy Prioritization
Estimate of Capital Cost (Initial Cost)
Low
$0 to approximately $200,000
Medium
$200,000 to approximately $2 million
High
Greater than $2 million
Potential Impact on Long
Term O&M Costs Cost of Ownership
Increase
Increases O&M cost
Decrease
Decreases O&M cost
Neutral
No impact on O&M cost
Potential Payback Period
Short-term
1
to 5 years
Mid-term
5
to 15 years
Long-term
Greater than 15 years