Sample Report _1 - CTA Recovery Proposal Presented to...

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1 CTA Recovery Proposal Presented to Anthony Corte Lecturer, Managerial Studies Department BA 200 Prepared by: Team Member Name (Alpha Order) Team Member Name Team Member Name Team Member Name December 2, 2009
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2 TABLE OF CONTENTS EXECUTIVE SUMMARY ............................................................................................... 3 INTRODUCTION .............................................................................................................. 4 BACKGROUND ............................................................................................................. 4-5 PROBLEM .......................................................................................................................... 6 Significance ............................................................................................................. 6 Scope ....................................................................................................................... 6 Organization ............................................................................................................ 6 Literature Review and Sources….. ......................................................................... 7 Definitions of Key Terms ........................................................................................ 7 BODY .................................................................................................................................. 7 Discussion ............................................................................................................. 7-8 Analysis .................................................................................................................... 8 Interpretation ........................................................................................................ 8-9 Evaluation ........................................................................................................... 9-10 CONCLUSIONS ............................................................................................................... 10 RECOMMENDATIONS .............................................................................................. 10-11 APPENDIX A .............................................................................................................. 12-13 APPENDIX B ................................................................................................................... 14 APPENDIX C …………………………………………………………………………...15 APPENDIX D …………………………………………………………………………...16 WORKS CITED .......................................................................................................... 17-18
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3 EXECUTIVE SUMMARY The purpose of this report is to recommend a plan that would return the Chicago Transit Authority (CTA) back to a balanced budget and profitability. The major problem is the fact that the CTA has threatened major cuts almost every year since 2004. The CTA has not been able to permanently restructure itself in order to avoid these potential cuts and return to profitability. The findings in this report show that the budget shortfalls result from three problems, resulting from two areas: funding and poor management of operations. The first problem involves the inefficient funding it receives from the state of Illinois, at a time when revenue from fares is volatile. The second problem is the inefficient budget of the CTA, more specifically how it controls its fuel costs. The third problem results from the poor customer experience that the CTA provides, which leads to lower ridership and further decreases in revenue. These three problems have led to the CTA’s imbalanced budget. The conclusions and recommendations in this report present plans that will bring the CTA back to a balanced budget and profitability. These recommendations are: restructuring the funding formula to be based on performance based indicators and increasing funding in general through new, stable, sources of revenue, cutting fuel costs by hedging, and improve service and efficiency by cutting overlapping routes, increasing security and investing in new equipment. By implementing these recommendations, the Chicago Transit Authority will be able to balance its budget and return to profitability.
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4 INTRODUCTION This report suggests a new proposal to help the Chicago Transit Authority (CTA) alleviate a $300 million deficit in their budget for 2010. Every year when the new budget report is released there seems to be “yet another doomsday”, implying that the CTA simply does not have the required cash flows to balance their enormous costs. Due to the CTA’s inability to solve this matter , the CTA ends up increasing their debt, and facing a reoccurring problem. The budget deficit the CTA faces stems from three smaller problems which contribute to their overall inefficiency. The first problem revolves around the CTA’s inability to generate revenues. The second problem is simply that the CTA has an inefficient budget. The third and final problem involves the poor customer
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