Capital costs
Capital costs are bus operator and authority expenditures incurred to purchase the assets required to provide bus service. These include vehicles, maintenance workshops and bus garage facilities, and supporting infrastructure requirements. The authority often approves and purchases these assets.

The financial model’s capital planning capability
The financial model gives the authority a tool to determine whether it can afford to purchase new buses and invest in infrastructure improvements within a given time frame. It will have separate bus operating and authority capital cost categories and corresponding sources of funding that also link to operating costs, farebox and other revenues. This will allow the authority to assess the impact of new bus purchases and infrastructure investments on fare levels in addition to demonstrating whether there are sufficient funds for its capital investment program from other revenues.

Vehicle replacement and procurement
The authority should clearly distinguish between fleet replacement and depreciation as an operating cost, and the Capital costs associated with the periodic purchase of new vehicles. The financial model can evaluate the amount set aside annually from operating revenues for new vehicle purchases and the requisite changes in fare levels to finance the procurement.

Evaluate alternative vehicle and infrastructure investments
The financial model’s capital planning module allows the authority to test alternative vehicle purchase and infrastructure construction schedules based on network operating requirements, quality of service objectives, and the availability of farebox and other revenues.

Especially significant for the authority is its ability to make annual debt service payments to creditors for any loans required to purchase buses or make infrastructure improvements. The financial model must show the origin of the funding source used for annual debt service payments, such as local and/or national government budget transfers or other revenue sources. On occasion, the authority may use farebox revenues to guarantee loan payments.

See also
Operating costs
Authority costs