2 Sorley Final Draft 64kbps
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Participants:
Tom Sorley
Deputy Director of Radio Communications Services
City of Houston, Texas

Ben Krauss
Public Safety Technology Specialist
SEARCH, The National Consortium for Justice Information and Statistics

Podcast length: 21:33

Ben Krauss:  The following is another conversation in our series of podcasts on lessons learned and best practices from projects funded through the COPS Technology grants. These podcasts are presented by SEARCH, The National Consortium for Justice Information and Statistics. This series is made possible through funding from the U.S. Department of Justice Office of Community Oriented Police and Services, COPS. Today's topic is managing funding and finance challenges. Our guest is Tom Sorley, Deputy Director of Radio Communications Services for the City of Houston. I'm Ben Krauss, a Public Safety Technology Specialist for SEARCH and moderator for this podcast. 

The City of Houston has undertaken a large project to build a shared radio system for all city users.  Planning has been underway for several years and funding has been lined up from multiple sources. Tom, we'd like to welcome you today. Can you tell us a bit about Houston's project and share your background with it?

Tom Sorley:  The city began in 2002 with the premise that they had some interoperability problems both within the city and also within the region. So they hired a consultant to come in and do a needs assessment. The city currently at that time owned four radio systems. We now still operate on four radio systems. We just decommissioned one and moved those folks over to the county. So we have actually four radio systems that we operate on.

The city is building one system for all the participants in the city to operate on. The new system is a standards-based Project 25, Phase Two radio system. It will be a 48-site, multiple simulcast cells for in-building coverage. Not to get too technical, but basically it's a very large system, 48 sites to cover our 640 square miles of city.

My background, I was brought in December of 2006 to head up the project and update the user requirements and then do the procurements—we did a competitive procurement—then project manage and ultimately lead the new organization that's going to operate and maintain the system.

Ben:  Tom, the cost with options was estimated to be over 130 million dollars, approximately a third of which will be met with grants. How do you come up with funding for such a large project?

Tom:  The first and most important thing is to get buy-in from the key people within your organization. For us that was the mayor, obviously, the CAO of the city and, for funding, our Director of Homeland Security out of the mayor’s office. He actually is in charge, or his organization is in charge, of most of our Homeland Security grant efforts. And he is one of our main project sponsors, so he is constantly looking for other grant opportunities. One of the first things the city did before I came here was to pass a voter-approved bond for 34 million dollars and that was specifically for some project costs but mostly for matching funds because we knew we were going to need a lot of grant funding and we needed to make sure we had a source of cash to match. A lot of the grants require 25 percent grant funding match. So we had to ensure we had that cash available.

Ben:  Continuing with the theme of grants, most grant programs look to fund specific standalone projects. How have you dealt with that when none can fund more than a small share of Houston's?

Tom:  One of the first things we did was try to figure out a logical means of breaking the project apart into standalone pieces that we could describe separately but that would then blend together to make a whole. For us, we chose to use sites. Again, we have basically 48 sites in our system. So all was wrapped mostly around individual sites. Then we also broke apart some subsystems, such as the main controllers and master sites. Maybe the microwaves, the building themselves. But mostly we did it based on sites and the concept was that the sites could stand alone and operate by themselves but then they ultimately would be rolled into the larger system. We actually have basically two levels of site implementation from a coverage perspective.

We have all of our Public Work sites, which is a minimal amount of coverage compared to the Public Safety sites [that] are coming on line early. But those sites also have co-located Public Safety sites on them. They'll all be built at the same time... that subset will be built all at the same time, but the Public Works parts will be activated and turned on. So I guess we envision, ultimately, cutting over in two big phases.

One on the Public Works layer, which is a minimal amount of coverage. And we're actually going to cut both our Public Works Department and our Fire Department over onto that layer first. Then when we get the rest of the sites turned on and activated, we're going to cut Police over onto that layer and then we're going to bring Fire from the Public Works layer onto that same layer with Police.

Ben:  You said that it's important to bring agency grant and finance people into the project early on. Why is that?
Tom:  Well, mostly buy-in but also the agency folks that do finance and grants come across opportunities that may be missed on a centralized manner. Also, most of the time they are planning their budgets multiple years in advance. If you bring them in early, it's a greater chance of success because they can put it in their funding models to get long-term financing. It's especially important for enterprise organizations or enterprise parts of your organization such, for us, such as our Aviation or Public Works departments that actually have enterprise-funded programs. If we are going to use them to participate, we have to get them involved early so they understand what it is we're talking about and when they're likely to need money. Our finance committee is headed up by our debt services area of finance.

These are the people that do the bond funding for the city and the long-term and short-term debt support of the city. They actually head up the committee. Then we have participants from our two enterprise departments, which are Public Works and Aviation. Then we have representatives from our Homeland Security folks, which are the grant people. Lastly, we have representatives from our General Services Department that normally do the Capital Improvement Project Funds for the City, so they oversee all of our capital projects. So, that's our basic committee.

The meetings originally started with, "Here's the project estimate, and here's one of the models we came up with." Our first order of business was to figure out what the magnitude of the project was, and then figure out if we could come up with a way of dividing the costs across the participants. So, that was really our first order of business.

Then the second order of business was to try to figure out the funding sources, which included estimating things like grants, and the potential to get other partners on this system, and if we got other partners, what sort of contribution to the funding of the project could we expect?

A lot of that effort was trying to put an order of magnitude on the different funding sources. We couldn't get down to dollars and cents, per se, but we could get an order of magnitude of what we expected. Since then, we've just been refining estimates, and developing timing models from that.

Now that we're in the project, we only meet about twice a year to review where we're at with our projections and what the impact on the upcoming budget year is; the verifying of sources, and those sort of things.
Ben:  Did the Finance Committee have any involvement with RFP or evaluation?

Tom:  Actually, normally we would do that, but we outsourced that piece of it. So we had a consultant for the technical, and then the City had on contract a financial consultant for some other activities. We used them to do a viability assessment of the companies, and also to do a comparison of the costs from a bottom line sort of perspective. So I guess to answer your question, generally they should, but in our case we already had an additional resource, so we used them instead.

Ben:  The Houston Radio System will share a portion of costs across participants. How do you build a defensible cost distribution model?

Tom:  That's actually a tough question. For us, we use the number of radios that individual departments needed for part of the new system, so that we could distribute on something that's easy, but it can be any number of things, provided it is something either tangible or is a statistic that is agreed upon by everyone. For instance, you could use subscribers or radios, the number of radios like we did. You could use the number of 9-1-1 calls; [that] is another model that's been kicked around. You can use the sites themselves. What area do you service if you have a multi-area system?

Tangible, in my opinion, is always better. So, if you can use radios or sites, it is something everybody can wrap their hands around and really understand what it is you are talking about, and therefore it becomes defensible.

Ben:  With various cycles across different grants and other funding sources, timing must be critical for projects like yours. What are the challenges in scheduling and synchronizing so many moving parts?

Tom:  Well, there's a myriad of challenges. Funding cycles, we mentioned earlier in one of the questions, is something that is difficult. The different performance periods in the grant make it very difficult to determine what you can buy and when you can buy it. Almost all grants are reimbursement basis, so you actually have to receive the equipment before you can get the money back. So knowing what the layout of your project is in advance is something that is really critical, so that you can time what you actually apply for, the grants, to when you might be getting it.

Let me give you an example of that. If you're building a large system and you're going to use microwave radio to connect the system together, you have to have the microwave in place before you can bring the system online. So microwave would be something you could put in for earlier, then say the radios that they are going to be using the system.

That's kind of an elementary example, but you have to actually time the performance cycles of the grants to when you would expect the equipment. When you're doing that, it's very important to have a large kind of flowchart, if you will, on a map that you can actually plug these things into and actually look at them. I'm a very visual person, and I had to get a very large wall hanging to be able to keep track of all of it, especially on a large project like ours.

What we used almost exclusively is spreadsheets. The critical piece to that was when we were sharing them, we had to establish an “of the spreadsheet.” I know that sounds kind of funny, but what we found was version control issues.
For instance, our project staff would develop a cost model spreadsheet and send it over to finance, and then they would make some changes in funding sources or timings and send it back, and we had already updated it again. So, we had a lot of issues with, "Who owns the spreadsheets?" But spreadsheets is really what we used. It was the only thing we all had in common that allowed us to share the information electronically, because we're in about 10 different office locations.
Ben:  Are you able to work off of those spreadsheets, showing work breakdowns during meetings?

Tom:  Yes. With the Finance Committee, we don't normally get down to that level. Our project is based around milestones, and our payments are all tied to milestones, and so we have 11 project milestones. So, we don't have to get down past that for the funding folks. Now, when we pull the grant people aside, and that's a subcommittee kind of thing, we deal directly with them on the grant timing, and when do we need to produce the documentation and inventories, and those sort of things that will allow us to pay on the milestone schedule, but then tie it back to the actual grants.

Ben:  Do you have individual milestones spread across multiple funding sources?

Tom:  I will give you an example. Our first three milestones on our project: one, we had a milestone for contract execution with some funding tied to it. We had a milestone for detailed design review, and then we had a milestone for system factory staging, where you actually in effect take delivery of the equipment once you verify that it all works. We chose to fund those three milestones with a combination of four different grants, because the performance period of those grants were all similar, and we knew we actually had to take delivery of the equipment at that endpoint so that we could get reimbursement from all those granting sources. So that's kind of an example.

We are working now on the next milestones and attaching which grant goes to those milestones because we have all the grants obviously tied to particular sites. So now we're trying to tie the next set of grants to when we're going to be bringing these sites online, and then tying that back to the milestones.

There's not an easy answer to that question.

Ben:  What other unanticipated funding and finance challenges have you faced with your project?

Tom:  One of the problems we had is there's a lot of services that go along with building a system, and generally grant programs are geared towards buying equipment, not buying systems. So it's very difficult to spread systemwide services down to the individual level. One of the reasons we pick sites as a means of dividing up what we were applying for is because it was easier to spread the systemwide services across those increments, being sites. But it's very difficult to do that, especially if you have different performance periods. You've got to be able to defend receiving those services in that performance period. So one of the big challenges is getting the people that are giving you the grants to understand that you need to buy a system and not a widget.

That is very difficult because people that are giving you money, they want to be the champion, if you will, of that project. When they realize that their grant is but a piece of this big project, it's not as sexy as buying a piece of equipment and saying, "Yeah, I paid for all of that. And that's what we provided to the City of Houston." So instead of being a holistic sponsor, they're now just a piece. And it's not easy to get them to buy into that.

Ben:  Where do you find out about best practices and lessons learned by others?

Tom:  Most of the reference material is geared towards medium-size or small systems because that's the majority of the systems out there. There's not very many large systems, and most of the large cities have had systems in place for quite some time. So there really isn't a lot of reference. I've talked a lot to the State of Michigan, which has a very large system implementation, the State of Utah. But as far as large metropolitan areas, there really isn't anybody to talk to at the moment. I've talked to some medium-size cities such as Phoenix. The folks out there have a lot of experience in implementing so I've talked to them. I'm actually talking to several of the large cities about what we're doing because they're now starting... for instance, L.A. is starting a new project. So it's more I'm sharing what we're doing because there hasn't been this grant funding available back when the other larger cities were doing this.

Ben:  How do very large projects such as Houston's differ from smaller ones?

Tom:  The profile is different. When you start talking hundreds of millions of dollars, people start taking the project a lot more seriously. I think just the magnitude of what you're doing is the big difference. I'll give you a quick “for instance.” The user needs requirements committee that we had, I've done this in the past and I would have anywhere from 10 to 15 people, cross-sectional, on that committee. We had about 45 on this project, and that was the bare minimum that we could possibly squeeze onto that committee to get a valid cross-sectional representation of the users.

It's just everything you do is bigger. So you have a lot of challenges that come with that, mostly logistical in nature. Where do you meet? How do you balance all those calendars? Those are really the kind of challenges. Everything else is basically the same. Project management is project management.

Ben:  Are there any regulatory or technological clouds on the horizon that may impact your project?
Tom:  Not really regulatory other than Phase Two of the standard. We're waiting on that to get finalized. Our contract actually calls for them to implement that at no cost when it's finalized. We were hoping to do that straight out of the box but I'm not sure that the timeline is going to exactly match up. The other thing is there's a big change on the deploying microwave. We've all done traditional channelized microwave. And basically microwave is moving away from that, and it's going to Ethernet, and MPLS, and big pipes versus channelizing. And it's going to take us a while, I think, in the radio world to get out of the old mindset and get into the, “Man, this works a whole lot better.” It's just different.

A lot of the technology companies specifically didn't really allow you to do anything other than channelized microwave up until recently.
Ben:  Tom, what carry-away messages do you have regarding managing funds and finance challenges?

Tom:  Start early is one of the messages I would give. Get the key people involved early. Get the purchasing people involved, get the grant people involved, get the finance people that really have nothing to do with grants but are also people that are maybe going to give you money in the future. We have a whole finance committee that has been involved since the very beginning. Even if they don't have an active role in the project, they know what's going on and they understand how it fits into the rest of the financing of the City. This is by far the largest non-infrastructure project that we've ever done in the city. So it's imperative that everyone in the city understand how the funding is going to work because it potentially has to give up something, especially in these lean times, to make sure that that project is successful.

Ben:  You've been listening to a SEARCH podcast on managing funding and finance challenges. We would like to thank our guest Tom Sorley, Deputy Director of Radio Communications Services for the City of Houston. This project is supported by cooperative agreement number 2007-CK-WX-K002 by the U.S. Department of Justice Office of Community Oriented Policing Services. Points of view or opinions expressed in this podcast are those of guests and moderators and do not necessarily represent the official position or policies of the U.S. Department of Justice.

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