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A I R P O R T C O O P E R A T I V E R E S E A R C H P R O G R A M ACRP REPORT 106 TRANSPORTAT ION RESEARCH BOARD WASHINGTON, D.C. 2014 www.TRB.org Research sponsored by the Federal Aviation Administration Subscriber Categories Aviation ⢠Finance ⢠Operations and Traffic Management Being Prepared for IROPS: A Business-Planning and Decision-Making Approach Joakim Karlsson Kevin King Rohit Viswanathan Timothy McInerney Douglas Slocum MCR FedeRal, llC Washington, DC and Jessica Domitrovich Tim Phillips Jay Bingham CRitiCal Path, inC. West Fargo, ND
AIRPORT COOPERATIVE RESEARCH PROGRAM Airports are vital national resources. They serve a key role in trans portation of people and goods and in regional, national, and inter national commerce. They are where the nationâs aviation system connects with other modes of transportation and where federal respon sibility for managing and regulating air traffic operations intersects with the role of state and local governments that own and operate most airports. Research is necessary to solve common operating problems, to adapt appropriate new technologies from other industries, and to introduce innovations into the airport industry. The Airport Coopera tive Research Program (ACRP) serves as one of the principal means by which the airport industry can develop innovative nearÂterm solutions to meet demands placed on it. The need for ACRP was identified in TRB Special Report 272: Airport Research Needs: Cooperative Solutions in 2003, based on a study spon sored by the Federal Aviation Administration (FAA). The ACRP carries out applied research on problems that are shared by airport operating agencies and are not being adequately addressed by existing federal research programs. It is modeled after the successful National Coopera tive Highway Research Program and Transit Cooperative Research Pro gram. The ACRP undertakes research and other technical activities in a variety of airport subject areas, including design, construction, mainte nance, operations, safety, security, policy, planning, human resources, and administration. The ACRP provides a forum where airport opera tors can cooperatively address common operational problems. The ACRP was authorized in December 2003 as part of the Vision 100ÂCentury of Aviation Reauthorization Act. The primary participants in the ACRP are (1) an independent governing board, the ACRP Oversight Committee (AOC), appointed by the Secretary of the U.S. Department of Transportation with representation from airport operating agencies, other stakeholders, and relevant industry organizations such as the Airports Council InternationalÂNorth America (ACIÂNA), the American Associa tion of Airport Executives (AAAE), the National Association of State Aviation Officials (NASAO), Airlines for America (A4A), and the Airport Consultants Council (ACC) as vital links to the airport community; (2) the TRB as program manager and secretariat for the governing board; and (3) the FAA as program sponsor. In October 2005, the FAA executed a contract with the National Academies formally initiating the program. The ACRP benefits from the cooperation and participation of airport professionals, air carriers, shippers, state and local government officials, equipment and service suppliers, other airport users, and research orga nizations. Each of these participants has different interests and respon sibilities, and each is an integral part of this cooperative research effort. Research problem statements for the ACRP are solicited periodically but may be submitted to the TRB by anyone at any time. It is the responsibility of the AOC to formulate the research program by iden tifying the highest priority projects and defining funding levels and expected products. Once selected, each ACRP project is assigned to an expert panel, appointed by the TRB. Panels include experienced practitioners and research specialists; heavy emphasis is placed on including airport pro fessionals, the intended users of the research products. The panels pre pare project statements (requests for proposals), select contractors, and provide technical guidance and counsel throughout the life of the project. The process for developing research problem statements and selecting research agencies has been used by TRB in managing cooper ative research programs since 1962. As in other TRB activities, ACRP project panels serve voluntarily without compensation. Primary emphasis is placed on disseminating ACRP results to the intended endÂusers of the research: airport operating agencies, service providers, and suppliers. The ACRP produces a series of research reports for use by airport operators, local agencies, the FAA, and other interested parties, and industry associations may arrange for work shops, training aids, field visits, and other activities to ensure that results are implemented by airportÂindustry practitioners. ACRP REPORT 106 Project 10Â14 ISSN 1935Â9802 ISBN 978Â0Â309Â28384Â7 Library of Congress Control Number 2014931996 © 2014 National Academy of Sciences. All rights reserved. COPYRIGHT INFORMATION Authors herein are responsible for the authenticity of their materials and for obtaining written permissions from publishers or persons who own the copyright to any previously published or copyrighted material used herein. Cooperative Research Programs (CRP) grants permission to reproduce material in this publication for classroom and notÂforÂprofit purposes. Permission is given with the understanding that none of the material will be used to imply TRB or FAA endorsement of a particular product, method, or practice. It is expected that those reproducing the material in this document for educational and notÂforÂprofit uses will give appropriate acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from CRP. NOTICE The project that is the subject of this report was a part of the Airport Cooperative Research Program, conducted by the Transportation Research Board with the approval of the Governing Board of the National Research Council. The members of the technical panel selected to monitor this project and to review this report were chosen for their special competencies and with regard for appropriate balance. The report was reviewed by the technical panel and accepted for publication according to procedures established and overseen by the Transportation Research Board and approved by the Governing Board of the National Research Council. The opinions and conclusions expressed or implied in this report are those of the researchers who performed the research and are not necessarily those of the Transportation Research Board, the National Research Council, or the program sponsors. The Transportation Research Board of the National Academies, the National Research Council, and the sponsors of the Airport Cooperative Research Program do not endorse products or manufacturers. Trade or manufacturersâ names appear herein solely because they are considered essential to the object of the report. Published reports of the AIRPORT COOPERATIVE RESEARCH PROGRAM are available from: Transportation Research Board Business Office 500 Fifth Street, NW Washington, DC 20001 and can be ordered through the Internet at http://www.nationalÂacademies.org/trb/bookstore Printed in the United States of America
The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. On the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. C. D. Mote, Jr., is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, on its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academyâs purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. C. D. Mote, Jr., are chair and vice chair, respectively, of the National Research Council. The Transportation Research Board is one of six major divisions of the National Research Council. The mission of the Transporta- tion Research Board is to provide leadership in transportation innovation and progress through research and information exchange, conducted within a setting that is objective, interdisciplinary, and multimodal. The Boardâs varied activities annually engage about 7,000 engineers, scientists, and other transportation researchers and practitioners from the public and private sectors and academia, all of whom contribute their expertise in the public interest. The program is supported by state transportation departments, federal agencies including the component administrations of the U.S. Department of Transportation, and other organizations and individu- als interested in the development of transportation. www.TRB.org www.national-academies.org
C O O P E R A T I V E R E S E A R C H P R O G R A M S AUTHOR ACKNOWLEDGMENTS The research reported herein was performed under ACRP Project 10Â14 by MCR Federal, LLC, and its subcontractor Critical Path, Inc. Joakim Karlsson of MCR Federal, LLC, was the Principal Investigator. The other authors of this report were Kevin King, Rohit Viswanathan, Timothy McInerney, and Doug Slocum of MCR Federal, LLC, and Jessica Domitrovich, Tim Phillips, AAE, and Jay Bingham, CPA, of Critical Path, Inc. CRP STAFF FOR ACRP REPORT 106 Christopher W. Jenks, Director, Cooperative Research Programs Michael R. Salamone, ACRP Manager Theresia H. Schatz, Senior Program Officer Terri Baker, Senior Program Assistant Eileen P. Delaney, Director of Publications Sharon Lamberton, Assistant Editor ACRP PROJECT 10-14 PANEL Field of Operations Frederick Busch, Denver International Airport (Retired), Denver, CO (Chair) John DeCoster, Trillion Aviation LLC, Austin, TX Al N. Gulamali, Lee County (FL) Port Authority, Fort Myers, FL Dan J. Letellier, Sioux Falls Regional Airport, Sioux Falls, SD F. Paul Martinez, Dallas/Fort Worth International Airport, Dallas, TX Melinda Z. Pagliarello, LeighFisher, Reston, VA Todd Madison, FAA Liaison Christine Gerencher, TRB Liaison
ACRP Report 106: Being Prepared for IROPS: A Business-Planning and Decision-Making Approach provides a guidebook with a decisionÂmaking process for airport management to use in justifying airport planning and funding decisions (capital and O&M) related to supporting IROPS contingency planning. This decisionÂmaking process includes the prin cipal stakeholders involved: airports, airlines, and agencies (e.g., FAA, CBP, TSA, and state and local agencies) and considers the differences in airport characteristics (e.g., geographic location, use and lease agreements). Factors considered include the projected frequency of IROPS events, impacts on the airport and its stakeholders, and effectiveness of the pro posed mitigation alternatives. Each potential investment is evaluated in terms of strate gic challenges, user benefits, and tactical complexity. The research presents a structured approach to quantifying the lifecycle economic value of proposed IROPS mitigation alter natives through a spreadsheetÂbased businessÂplanning and decision support tool. The tool is entitled the IROPS Investment Support Tool (IRIS). Meeting customer core needs during irregular operations (IROPS) is a critical prob lem for airports, airlines, agencies, and other aviation service providers. While regulatory policies and industry practices continue to evolve, IROPS challenge the resiliency of the global aviation system and negatively impact customer core needs. IROPS can result from random phenomena and planned activities from either natural causes such as weather (e.g., thunderstorms, snowstorms, fog, and hurricanes) or other operational factors (e.g., air traffic directives such as ground delay programs, airport maintenance or construction activities, and security threats or alerts). Operational contingency planning guidance to support IROPS is provided in ACRP Report 65: Guidebook for Airport IROPS Contingency Planning, but managing IROPS needs to be integrated with mid and longÂterm business planning and decision making. Current planning and investment evaluation processes do not adequately capture the benefits or costs associated with the planning for affected opera tions. Current practice in these areas relies principally on either generally accepted design practices handed down over time (e.g., use of peak month average day design standards) or more formalized benefitÂcost or investment analyses designed around normal operating conditions. These practices are no longer a sufficient guide in valuing investment decisions intended to mitigate the impacts of IROPS. In addition, investment decisions being made in support of NextGen that positively impact operations must dovetail with planning and investment decisions related to IROPS. Thus, an enhanced strategy is needed that supports a more proactive businessÂplanning approach for managing IROPS. This research was conducted under ACRP Project 10Â14 by MCR Federal, LLC, in asso ciation with Critical Path, Inc. As part of the research, the firms conducted a literature F O R E W O R D By Theresia H. Schatz Staff Officer Transportation Research Board
review that included existing IROPS planning guidelines and individual airport tarmac delay contingency plans, and incorporated the research teamâs subject matter expertise and experience. They identified and categorized airports based on a number of criteria focusing on customer services, reviewed best practices, and surveyed airports to document existing businessÂplanning practices for airports. The research team then developed a flexible busi ness case analysis approach that merges multiÂcriteria decision analysis with traditional benefitÂcost analysis. They also developed a spreadsheetÂbased businessÂplanning and deci sion support tool and conducted demonstrations to test the tool at a sample of representa tive airports. A separate contractorâs final report, which provides background on the research con ducted in support of the guidebook, has been posted on the ACRP Project 10Â14 web page that can be found by searching the TRB website (www.trb.org) for ACRP Report 106.
1 Summary 4 Chapter 1 Introduction 4 1.1 Objective 5 1.2 How to Use This Guidebook 6 1.3 Who Can Use This Guidebook? 6 1.4 History 8 1.5 Related ACRP Projects 10 Chapter 2 Business Planning for IROPS 10 2.1 Definitions 11 2.2 Identifying IROPS Events and Their Impacts 13 2.3 Identifying Mitigation Initiatives 15 2.4 The IROPS Business Case Analysis 17 2.5 Limitations of Traditional Business Case Analysis 18 2.6 Cost Estimating 19 2.7 Overview of the Business Case Methodology for IROPS Business Planning 21 Chapter 3 IROPS Business Planning Using Decision Analysis 21 3.1 The Analytic Hierarchy Process 22 3.2 IROPS Investment Portfolio 23 3.3 IROPS Impact 24 3.4 Costs 25 3.5 Evaluating the Effectiveness of IROPS Mitigation Initiatives 29 3.6 Rank Ordering the Investment Portfolio 31 Chapter 4 IROPS Investment Support (IRIS) Decision Support Tool 31 4.1 Before Getting Started with IRIS 32 4.2 IRIS Workflow 33 4.2.1 Defining the IROPS Portfolio 34 4.2.2 Defining Lifecycle Costs 35 4.2.3 Determining Stakeholder Preferences Through Pairwise Comparisons 36 4.2.4 Evaluating the Effectiveness of Each IROPS Investment Initiative 36 4.2.5 Ranking the IROPS Investment Portfolio 38 Chapter 5 Strategic Planning, Financing, and Airport Use Agreements 38 5.1 Strategic Planning 38 5.2 Funding Eligibility 38 5.2.1 Internally Generated Funds 39 5.2.2 Airport Improvement Program/Passenger Facility Charges 40 5.3 Airport Use Agreements 41 5.4 Leased Facilities C O N T E N T S
42 5.4.1 Exclusive Use 42 5.4.2 Preferential Use 42 5.4.3 Common Use 42 5.4.4 Limitations and Opportunities 42 5.5 Rates and Charges 43 5.6 MajorityÂInÂInterest 44 Chapter 6 Lessons Learned 44 6.1 IROPS BusinessÂPlanning Needs 45 6.2 Impact of Funding Availability 46 6.3 Need for an IROPS Investment Decision Support Tool 47 6.4 Implementing Pairwise Comparisons 48 6.5 Evaluating NonÂEconomic Benefits 48 6.6 Conclusions 50 References A-1 Appendix A Business Case Analysis Primer B-1 Appendix B IRIS User Guide C-1 Appendix C Sample IROPS Investment Portfolio Note: Many of the photographs, figures, and tables in this report have been converted from color to grayscale for printing. The electronic version of the report (posted on the Web at www.trb.org) retains the color versions.