Cost benefit analysis
The IBG team has been conducting cost benefit analyses (CBA) in the aviation sector for over 20 years. During this time, we have been innovating and perfecting our methodology, to meet the needs of our clients for robust and transparent cost benefit analyses. CBA is primarily a management tool, providing evidence that a proposed investment is justifiable and capturing the likely variance of costs and benefits. CBA also helps bring different parties together where there may be a lack of engagement or disagreements over a project. Where new concepts of operation are being implemented, CBA can provide valuable feedback to the project definition to ensure that benefits are well understood and maximised, enhancing the overall return on investment.
We vary our approach according to the needs of clients but typically we will conduct a high-level CBA that can later be added to through detailed analysis where required. We are typically contracted to undertake cost benefit analysis of operational changes supported by new technology. However, we also support government policy work through regulatory impact assessment, based on stakeholder consultation around potential regulatory changes.
Recent cost benefit analysis work includes AOCC/APOC for Riyadh International Airport, A-CDM CBA for Riga, Doha, Abu Dhabi international airports, CBA of remote tower implementations (contingency and remote tower centres), departure metering and Performance Based Navigation airspace changes. On the policy front, our consultants have supported the European Commission on several Single European Sky studies and regulatory reforms.
Business case development
Business cases draw heavily on cost benefit analysis, but we make a distinction as the business case will often address strategic and non-quantifiable benefits. Business cases may also focus on options appraisal and address different options to achieving an already agreed course of action. This may involve modelling of the whole business. Our experience includes modelling air navigation service providers, the impact of different investments and operational models, charging policy and revenues.
Key performance indicators
When it comes to implementation of operational changes, a key component is to define key performance indicators (KPI:s), which inform on the transition through to operational deployment. Our approach to defining KPI:s is to link these to the cost benefit analyses so that improvements in KPI:s indicate that the benefits are being achieved. We also base KPI:s on a minimal set to avoid information overload. Our experience of implementing operational changes in numerous airports gives us excellent insight into ‘what works’ for both transition and full deployment.
When a system or service is to be procured or when doing a feasibility assessment the estimated investment cost and budgets have to be established. Our team of experts can develop budget estimates based on benchmarking from previous similar projects or through an RFI process validated by specialist experts. Our team of experts can assess both OPEX and CAPEX costs.