Benefit-Cost Analysis

Airport Improvement Program (AIP) - Northwest Mountain Region

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A Benefit-Cost Analysis (BCA) is required for any project which preserves or enhances capacity AND the total discretionary funds requested exceed $10 million over the life of the project and is not among the exempted items spelled out in the BCA policy.

What does it mean?

Preserve

To extend the useful life of existing infrastructure, e.g. to rehab an apron.

Enhance

To improve upon an existing infrastructure, or to create new infrastructure, e.g., to strengthen an existing apron, or extend or build a runway.

Capacity

Anything which allows more or bigger aircraft to use the airport.

Since FAA's BCA requirement was formalized, FAA field personnel and airport sponsors have asked FAA Headquarters staff to interpret the BCA policy for its applicability. These requests typically occur at critical and time-sensitive points, such as in the development of BCA recommendations, or in the project approval stage. Responding to these issues so late in the process results in delay. In addition, Headquarters is responsible for ensuring proper and consistent application of BCA techniques. As a result, Headquarters, with assistance from a few field offices is developing a "how- to" guide for the preparation and review of BCA's. The guide contains many of the common BCA interpretations that have been collected over time, and uses them as case examples to assist airport sponsors during BCA preparation.

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National Policy and Guidance

Benefit-Cost Analyses (BCAs) help identify proposed projects that will provide a net benefit to the aviation community. We require BCAs for all capacity projects that require more than $10 million in AIP discretionary funds but can request them for less costly projects, as well.

Airport Benefit-Cost Analysis Guidance

• Federal Register Notice: Modifications to Benefit Cost Analysis (BCA) Threshold (PDF) - (October 24, 2011)
• Program Guidance Letter 12-01: Revised Guidance on BCA Threshold (PDF) - (October 28, 2011)
  Discusses threshold change raising the point at which a BCA is required from $5 million to $10 million in requested AIP Discretionary funds over the life of the project.
• FAA Policy and Final Guidance Regarding Benefit-Cost Analysis on Airport Capacity Projects for FAA Decisions on AIP Discretionary Grants and Letters of Intent (PDF) - (December 15, 1999)

Additional BCA Guidance

• Airport Benefit-Cost Analysis Guidance (PDF)
  • Addendum to FAA Airport Benefit-Cost Analysis Guidance, June 14, 2010 (PDF)
  • Calculating Delay Propagation Multipliers for Cost-Benefit Analysis, Mitre, February 2010 (PDF)
• Airway Planning Standard Number One, Order 7031.2c (PDF)
• Economic Analysis of Investment and Regulatory Decisions (PDF)
• Economic Values for Evaluation of FAA Investment and Regulatory Decisions
  • Revised Department Guidance: Treatment of the Value of Preventing Fatalities and Injuries in Preparing Economic Analysis, February 2008 (PDF)
  • Final Report, Revised October 3, 2007 (PDF)
  • Draft Final Report, December 31, 2004 (PDF)
  • Data Files (ZIP)
• Estimating the Regional Economic Significance of Airports (PDF, 1.67 MB)
• Planning Information Needed for FAA Headquarters Review of Benefit Cost Analysis (BCA) (PDF) - (March 31, 2006)
• Principles for Federal Infrastructure Investments (Executive Order 12893) (PDF) - (January 26, 1994)

See also . . .

• AIP Handbook, Order 5100.38
• AIP Program Guidance Letters (PGLs)
• ACRP Synthesis 13: Effective Practices for Preparing Airport Improvement Program Benefit-Cost Analysis

Contacts

Name/Title	Division	Phone
Jeffrey Wharff Senior Economic Advisor	Systems and Policy Analysis Division (APO-200)	(202) 267-7035
David Fish Program Analyst	Financial Analysis and PFC Branch (APP-510)	(202) 267-8818
Dennis Walsh Program Analyst	Financial Analysis and PFC Branch (APP-510)	(202) 493-4890