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5.3.2 Assessing feasibility and benefits
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This page displays officially adopted European Commission Guidance Material for the Establishment and Modification of Functional Airspace Blocks (FAB), edition 2.0 of 08 December 2011, following the positive opinion (about Version 1.0) of the Single Sky Committee in its 38th session on 3 December 2010 and additional review processes by the FFPG and SSC (of intermediate Version 1.2) in August and November 2011. See the disclaimer agreed by the Single Sky Committee regarding the non-binding and evolving nature of the Guidance Material and its initial use. | |
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| Portal: | FAB Guidance Material | 
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| Content source: | European Commission | 
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| Content control: | EUROCONTROL | 
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Assessment of feasibility and expected benefits within a result-oriented approach
Various methods of assessment exist to evaluate projects[1] in terms of their feasibility and value-added, within a result-oriented approach. These methods support the decision making-processes by providing information organized in a specific way, but cannot be a substitute for the decisions to be taken by the concerned FAB partners.
Result-oriented or business-oriented approach methods vary in terms of the extent of the analysis performed. ‘Lighter’ approaches are recommended at an earlier stage of the decision making process or when the expected magnitude of a project is relatively small. The methods discussed in this section, among other possible methods, range from simple to more complex, i.e. from the lighter approaches (e.g. SWOT analysis, cost-effectiveness analysis) through quantitative cost-benefit analysis and up to a ‘heavier’ approach (business case).
- SWOT analysis (see Ref. [200]) is a useful qualitative method that may be used to identify possible ways of enhancing cooperation, collaboration and/or coordination within a FAB and see how these fall within the agreed FAB strategy and policies. A SWOT analysis identifies the internal strengths (e.g. specific core competences or skills), internal weaknesses (e.g. lack of common technical infrastructure), external opportunities (e.g. traffic growth) and external threats (e.g. events disrupting air travel). Strengths, weaknesses, opportunities and threats are ranked, and the resulting matrix helps to decide on the best ways in which to enhance cooperation, collaboration and/or coordination between partners, which also best fit the agreed FAB strategy, policies, situation, expectations etc.
- Cost effectiveness analysis is a method recommended when partners need to make a choice among various ways in which to achieve a specific result. In this case the costs of implementing a solution are usually quantifiable but benefits are difficult to express in monetary terms. This method will rank various options in terms of their ‘cost per unit of effectiveness.’ Further details on this method may be found in European Commission’s Impact Assessment Guidelines.
- Cost-benefit analysis (CBA) is a quantitative method that uses the discounted cash flow analysis. It is a financial appraisal technique used across all industries and particularly in the production of CBAs for ATM projects. Discounted cash flow analysis takes account of the time value of money and is used to compare costs and benefits which occur at different points in time. An amount of money received today is normally considered to be of higher value than the same amount of money in the future considering the use which may be made of those funds in the intervening period and the greater uncertainty associated with future transactions. CBA measures the overall value added, by calculating a financial result (Net Present Value). A positive Net Present Value demonstrates that a given project would bring additional value.
A CBA is mainly recommended when the majority of costs and benefits of a project are quantifiable. It is a useful technique for comparison and selection of the best option out of several different projects (e.g. between different possibilities/ scenarios of partnership arrangements in a FAB with respect to achieving a specific objective).
A CBA not only includes an assessment of the known information, but also an appreciation of the risks and uncertainties and the degree of confidence which may be placed on the results.
A CBA may be performed in a basic, ‘light’ approach at an early stage of a project, when costs and benefits are estimated in terms of data ranges and the involvement of stakeholders is limited; or in a more enhanced, ‘heavier’ approach, when data inputs on costs and benefits are validated with strong involvement of the impacted stakeholders.
More information on differences between options of CBA may be found in "EUROCONTROL ATM Cost Benefit Analyses for Beginners, Edition 1.0, July 2010". Detailed guidelines on how to conduct a CBA are available in Guidelines for the economic appraisal of EATMP projects - the effective use of costbenefit studies and in "Management Concepts and Cases III, Arthur A. Thompson, JR and A. J. Strickland, June 2003. Ref. EUROCONTROL Standard Inputs for Eurocontrol Cost Benefit Analysis provides guidance on standard inputs to be used in a CBA. More guidelines as regards the CBA supporting a FAB (Article 9a.2(d) SPR) and info on available advisory material are in Chapter 7.4.5 of this material.
- A business case (see Ref. [118] and [119]) is a more comprehensive method to evaluate projects. The conduct of a business case is a structured process that prepares evidences for decision-makers and impacted stakeholders on the advantages (positive impacts) and disadvantages (negative impacts) of various possible alternatives by assessing their potential impacts from a multi-criteria perspective (typically safety, environment, costs), including synergies and trade-offs.
A business case goes way beyond a CBA. It consolidates qualitative and quantitative assessments in areas such as safety, security, environment, human performance and cost and benefit analysis. A business case also includes information on criteria such as feasibility and strategic fit. Through a process of validation, evidence is found to feed the data into the business case.
A business case is not just the sum of assessments in the different areas, it consolidates them, analyses interdependencies and trade-offs and, based on these, provides recommendations to the decision-makers.
A business case is not only multi-criteria but also multi-stakeholder. It can cover the different viewpoints of the FAB partners who have a stake in the decision. It may apply various tools (see Ref. [118] and [201]), such as trade-off analysis, probabilistic CBA, collaborative methods and cost & benefits mechanisms.
The methods described above may be applied in reiterative approaches. They can be used to evaluate a project before it has started, and then be updated with new available information. For a given FAB project, they may be applied to the entire FAB (including all FAB partners and stakeholders concerned) or for a limited scope, e.g. for just one specific stakeholder.