ACTIVITY 9.1: Develop financial plans and agree cost sharing


By Tom Wood / Updated: 28 Nov 2019


The implementation of sustainable urban mobilityinfo-icon actions requires a sound financial plan that defines how to finance the actions of the SUMP, including the detailed cost estimates that were prepared in Activity 7.2 and the financing and funding sources that were identified in Activity 8.2. With respect to the functional urban area of a city, funding and financing must come from different municipal, regional, national, private and multilateral sources. Ensuring the long-term sustainabilityinfo-icon of the SUMP measures requires strategically matching the funding needs of the measures with public budgets and a diversityinfo-icon of financing instruments, municipal loans, public utility loans, and, sometimes, private sector capital. Due to the long-time horizon of a SUMP, it is often useful to plan financing in phases, with sufficient detailing for first phase measures in order to attract funding and financing from public and private sources.

The proper phasing of projects is necessary to transition effectively to implementation and to ensure long-term financing sustainability. When thinking about the potential for raising private capital for initial investments, it is important to keep in mind that the cost of money, or the interest rate, that is typically paid by the private sector is higher than that paid by the public sector. This means that the private sector will require higher review streams (e.g. from more expensive ticket prices) to offset these costs. Successfully engaging the private sector also requires that the public sector convincingly and contractually takes on appropriate risks, particularly risks related to policyinfo-icon. The private sector also generally has a shorter investment time horizon than the public sector, and generally requires a faster return on investment.



  • Create a financing plan for all SUMP measures, with indicative sources of funding and financing.

  • Create a detailed financing plan for priority actions, that contains all projected expenditures, including taxes and contingencies, as well as revenues on an annual basis for the duration of the financing plan.

  • Ensure the financial viability of actions, also beyond the initial funding period.

  • Plan for contingencies to help achieve resilience against potential changes in income streams.

  • Identify opportunities for private sector involvement.

  • Agree on the distribution of costs and revenues among all involved organisations.



  • Coordinate with other municipalities, regional institutions (cost-sharing arrangements for cross- border public transport services) and the national level. Explore possibilities to jointly fund measures.

  • Assess the potential of private sector investor involvement in either capital, investment, operations, or a combination of both.

  • Prepare financial projections for first phase actions that include capital expenditure (up-front investment) as well as operation and maintenance costs and related revenue streams per year.

  • Discuss measures with potential financing partners and funding sources to ensure that the selected measures are well prepared.

  • Allocate financing and funding sources for all actions, including potential changes in revenue streams per year; Consider political commitment for the resolution of arising funding gaps.

  • Agree cost recovery arrangements (ratios, modalities) for shared systems and services, such as. contribution to the operating costs of public transport services.

  • Agree on the distribution of costs and revenues among municipalities, regional authorities, the national level, and public and private operators.

  • Prepare a detailed financing plan by financier for first phase investment.

  • Initiate access to technical assistance facilities, such as JASPERS/ ELENA, for complex measures that require follow-up studies to ensure viability and access to finance.


Timing and coordination

  • After Activity 8.3, building on the agreed-upon actions with their responsibilities and timeline.

  • Builds upon and deepens the estimated direct financial costs of actions and the identified funding sources (Activity 8.2).



✔ Detailed financial plans prepared and agreed for actions requiring financing in the first phase of SUMP implementation.
✔ Commitment obtained from relevant public entities to allocate sufficient public budget to fill financing gaps acquired.
✔ If required, initial application for sources funding for feasibility, market or other studies to prepare project completed.
✔ Financial sustainability of projects ensured.
✔ Division of costs and benefits among relevant actors agreed.

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 European funding and financing for renewing Barcelona’s public transport

The Municipality and public transport operator (TMB) of Barcelona can rely on a sound funding and financing plan to renew its bus fleet. The local transport operator received the financial support of ELENA (European Local Energy Assistance) which provided a grant of almost 1.5M€ to cover preparation studies (2011 – 2015) for a large-scale retrofit of diesels and CNG buses into hybrids. In 2019, the European Investment Bank (EIB) granted a loan of 73,5M€ to TMB to purchase 254 clean buses (fully electric, hybrid and CNG). The renewal of the public transport fleet contributes to the improvement of the air quality in Barcelona.
Author: Josep Maria Armengol Villa, TMB, collected by POLIS

GOOD PRACTICE EXAMPLE: Bucharest/Ilfov, Romania

 SUMP implementation based on comprehensive annual budget planning

Based on thorough data and problem analysis a list of priority areas for the SUMP was defined. This led to a range of organisational, operational and infrastructural measures included in the final SUMP. A cost estimate for each measure was made, thus identifying the scale of total investment needed to implement the Plan, to be put in relation with available financing sources. The SUMP served as a main tool to identify priorities for programming of EU funds until 2030. These needed to be considered in parallel with state funding, capital expenditure by Bucharest and Ilfov administration, lending from IFIs (EIB/EBRD) and additional income from the proposed parking strategy. Meanwhile it was possible to define the required budget for public transport operating subsidies and also network maintenance over the same period.
Author: Alan O`Brien, EIB/JASPERS, collected by Rupprecht Consult