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Guidance for Diversity in Airport Business Contracting and Workforce Programs (2020)

Chapter: Chapter 6 - Measuring Costs and Benefits of Contracting and Workforce Initiatives

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Suggested Citation:"Chapter 6 - Measuring Costs and Benefits of Contracting and Workforce Initiatives." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 6 - Measuring Costs and Benefits of Contracting and Workforce Initiatives." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 6 - Measuring Costs and Benefits of Contracting and Workforce Initiatives." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 6 - Measuring Costs and Benefits of Contracting and Workforce Initiatives." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 6 - Measuring Costs and Benefits of Contracting and Workforce Initiatives." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 6 - Measuring Costs and Benefits of Contracting and Workforce Initiatives." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 6 - Measuring Costs and Benefits of Contracting and Workforce Initiatives." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 6 - Measuring Costs and Benefits of Contracting and Workforce Initiatives." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 6 - Measuring Costs and Benefits of Contracting and Workforce Initiatives." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 6 - Measuring Costs and Benefits of Contracting and Workforce Initiatives." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 6 - Measuring Costs and Benefits of Contracting and Workforce Initiatives." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 6 - Measuring Costs and Benefits of Contracting and Workforce Initiatives." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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65 As airports develop, improve, or expand their diversity programs, an analysis of costs may be required to evaluate the cost-effectiveness of the programs. By tracking costs along with benefits, airports can determine which efforts result in the most cost-effective solutions and can focus their resources in those areas. They can better identify cost-saving opportunities. This chapter summarizes the specific costs airports are likely to encounter when implementing diversity programs and provides guidance on techniques for measuring costs and benefits. The ways in which airports incur costs associated with diversity efforts are described here based on information collected from interviews and questionnaires. These costs are directly associated with the airports’ workforce and contracting diversity programs, and they are also dispersed throughout normal airport operations. For example, almost every aspect of airport management and operation is involved in creating successful workforce and contracting diver- sity programs, from project procurement to project implementation to executive staff leader- ship. This chapter attempts to identify these costs and provide guidance to airports on how to estimate the full cost of these programs. This chapter groups most types of costs together but distinguishes whether costs apply to either workforce or contracting programs when they differ. Costs Associated with Diversity Programs at Airports Most commonly, airports rely on line item budgets from airport contracting and diversity offices to understand the cost of implementing a diversity program. However, many airports noted that not all the costs of their diversity programs are captured by the diversity office’s budget alone. An effective diversity program requires the participation and cooperation of staff in many different departments and at all levels. For example, information technology departments may support the purchase, installation, or maintenance of tracking software such as B2Gnow, mentioned frequently by airports in interviews conducted for this research. Legal departments may support interpretation, implementation, and enforcement efforts for federal contracts subject to FAA regulations. Staff supervising construction projects may also be engaged in monitoring, documenting and reporting on DBE compliance. Some municipal airports receive support from city government at no cost, including diversity department staff to help the airport meet the city’s diversity requirements for public-sector employers. Some of these activities in other departments may have substantial costs that are not captured in the Guidebook or the Tool. The majority of costs resulting from diversity initiatives are expected to be reflected in the diversity program budgets. Airports can use these costs as the basis for their cost estima- tion. Airports that are interested in understanding the costs more fully can take measures to estimate the effort expended by staff in other airport departments and the corresponding cost. C H A P T E R 6 Measuring Costs and Benefits of Contracting and Workforce Initiatives

66 Guidance for Diversity in Airport Business Contracting and Workforce Programs This chapter describes various types of costs incurred by an airport to run diverse business contracting programs and diverse workforce programs. These are the costs airports should attempt to quantify and track when conducting a comprehensive assessment of costs associated with implementing diversity programs. The sections provide suggested approaches for iden- tifying and estimating costs that are difficult to quantify. The costs were identified through a combination of a review of the literature on diversity program costs, interviews with airports, and professional knowledge. The organization and characterization of diversity program costs will be different at each airport. Therefore, the cost information presented here is intended to provide a basic framework for airports as they identify and track costs. These cost categories are consistent with the costs in the Benefit-Cost Tool that accompanies this Guidebook. Staff and Contract Management Costs associated with staff and contract management can include: • Salaries and benefits of staff working to manage the diversity contracting and workforce program and implement activities. When staff are hired either full- or part-time for diversity programs at airports, municipal agencies, or private or nonprofit organizations, those costs can make up a significant portion of an organization’s diversity budget. Several business or workforce diversity representatives interviewed for this research identified staffing costs as one of the largest line item costs in their budgets. • Working with professional and trade associations dedicated to minorities. These organiza- tions may be able to post job opportunities and help airport staff build more diverse networks. Several aviation associations, such as ACI-NA and AMAC, have career pages, job boards, or listservs and work with airports to post about these opportunities. Airport staff who are working to recruit candidates from minority backgrounds may spend time working with these organizations or coordinating with diversity liaisons in other professional associations to share knowledge and best practices on staff recruitment. Dedicating staff time to these activi- ties is an additional cost if it is not already accounted for in the program’s staffing budget. • Support staff to help design and implement new diversity policies at the airport. Numerous airports hire professionals whose responsibilities are to draft, manage, and implement diversity projects and policies. Some airports have diversity and inclusion offices, and others may have staff in independent departments. For example, responsibilities of human resources employees include addressing internal workplace culture, managing Title VI matters, addressing discrimination complaints and conducting investigations, working on affirmative action plans, working on EEO issues, sharing knowledge with recruiting employees, and conducting outreach. Some staff responsible for workforce diversity also manage contracting diversity. • Additional staff or additional labor hours may be needed to support new diversity initiatives. When new diversity initiatives are undertaken, there is often a need for additional labor hours beyond those already required in order to launch successfully. This may require the hiring of additional staff to support the initiatives. Note that starting new initiatives may come with upfront costs that can lessen (or increase) over time. Administration Administration costs can include project oversight to ensure that contracted businesses meet their diversity requirements. Airports have invested in oversight mechanisms, including soft- ware, to monitor compliance on diverse business subcontractor participation requirements based on prime and subcontractor reporting, as well as monitoring when payments are being made to subcontractors. Some airports have staff completely devoted to contract compliance and monitoring. Others may have policies that ensure communication with contracted businesses

Measuring Costs and Benefits of Contracting and Workforce Initiatives 67 is being met and is precise, especially through phone and in-person meetings. Even in the RFP and lease agreement phases, airports communicate with contractors and concessionaires on expectations, including what they may expect from working at the airport (Buckner, Pitters, and Weddig 2017). This takes staff time, possibly including emphasizing expectations and using three-strike policies if expectations are not being met. It can entail other forms of compliance oversight, such as hiring staff devoted to policy development and enforcement. Training Costs associated with training can include: • Sensitivity training may be required to help staff understand the benefits of diversity and influ- ence workplace culture to be more inclusive. Training, webinars, and workshops about diver- sity, inclusion, and sensitivity issues around the workplace are useful for equipping staff with the tools to create a welcoming and respectful atmosphere. Offering these types of training may require hiring outside professionals, investing in courses either online or in person, or they can be as simple as encouraging staff to do some reading or engaging them in internal group or one-on-one discussion sessions. These efforts may save costs in the long term, with a more inclusive work atmosphere leading to a higher sense of satisfaction for employees, deeper relationships between colleagues, and as a result, potentially higher employee reten- tion. These types of training may also be offered for contractors or concessionaires, as well as topics such as racial sensitivity or sexual harassment. • Skills training may also be required if airports are recruiting junior candidates and training them to eventually take over highly skilled positions. In interviews, several airports discussed the increasingly prevalent issue of older generations of airport managers and staff reaching retirement age. This leads to a need to train junior staff to take on more leadership positions, such as airport management. For this to be successful, airports will need to invest in skills training and professionalization for staff at all levels, particularly the junior level. Training for internal workforce development as well as contractor skills development may include topics such as intercultural sensitivity, which can sometimes involve the legal department. Outreach Efforts Outreach efforts can result in the following costs: • Technical assistance programs for diverse businesses. These programs may include one-on- one or group training programs for skill development or assistance with certain key tasks such as financing or accounting. The costs associated with providing technical assistance can include development and printing of communication and instructional materials, web development and maintenance to host materials, and compensation for instructors if hired contractors are used. • Youth outreach programs. Airport staff may conduct outreach efforts to engage young people or students interested in aviation. They may include job shadow programs that allow students the opportunity to visit airport staff for a day to learn about the various careers associated with the aviation industry. Other outreach efforts may include longer-term opportunities such as internships or externships for youth to learn about aviation careers. Some airports also offer scholarships for students interested in studying aviation-related disciplines. • Business development programs. Most medium and large hub airports interviewed for this study offer numerous business development programs as part of their outreach to diverse and small businesses. One key example is for airports to offer mentor-protégé programs to small businesses or minority- or woman-owned businesses. These can entail pairing DBEs with larger businesses that can provide mentorship and help the DBEs grow over set periods

68 Guidance for Diversity in Airport Business Contracting and Workforce Programs of time into more stable enterprises. These programs can track the amount of money each protégé firm receives in contracts over the course of their mentorship. • Outreach/networking events to identify and connect with diverse businesses. Having a pres- ence at events is an important form of outreach for airports. Some airports host events with several vendors, subcontractors, and prime contractors, to provide a space for networking. Airports also invest in one-on-one outreach efforts with partner agencies such as local cham- bers of commerce to take advantage of opportunities where community members are already gathering and to integrate more closely with existing community activities. • One-on-one certification guidance for small businesses to help them meet airport require- ments. Staff in airport business diversity offices may offer individual training meetings to help small firms become certified as DBEs or ACDBEs. Certification guidance can include helping firms understand the federal requirements necessary for certification of DBE or ACDBE status, as well as generally encouraging these firms to apply for certification in the first place. Airport staff may provide support assisting small or diverse businesses in understanding and becoming certified in the appropriate NAICS codes as well. • Promotional materials and advertisements to attract more businesses and communicate the benefits of the diversity contracting program’s efforts. When airport business diversity offices hold events, they often have to develop and print promotional materials such as booklets and circulate the materials on listservs, on their website, through trade groups, and through public bulletin sites. This is considered a cost in terms of staff time and materials. Materials can include handouts, flyers, email announcements, blurbs on websites, or short web or slide presentations. Some airports have developed a vendor outreach list that is used to notify small, minority-owned, and woman-owned businesses of contract opportunities, seek quotes from these businesses, and notify them of the airport’s pre-bid meetings and outreach events and of other airports’ events and opportunities. • Attendance at local events. A significant cost associated with outreach stems from airport attendance at local or community events, such as those hosted by business councils. These events result in travel, lodging, and meal costs. In addition, time spent at these events takes staff time away from other activities, resulting in staff time costs. Airports also invest staff time prior to and following these events to prepare communication materials targeted to the event and complete any follow-up communication. Research and Reporting Costs for research and reporting can include: • Economic impact studies or other data analyses and reports that demonstrate the effect of the airport’s diversity contracting efforts. Many of the economic impact studies are being conducted on the contracting side, though some are being developed with airport workforces in mind as well. Some airports have already invested in economic impact studies, though others are just beginning to do so. When airports work with their city or state governments to conduct economic impacts studies or other data analyses, these can take up to several years and require significant staff hours for data collection and review. There are also often costs associated with hiring contractors or consultants to perform these studies. Costs for research also include time for developing and distributing surveys, collecting industry information, and summarizing the findings (The Perryman Group 2016). The efforts for collecting these data and metrics take time and can be a significant cost to airports, though these efforts may be effective and rewarding at supporting and evaluating diversity programs overall. • Disparity studies or other data collection methods designed to identify areas for improve- ment in the diversity of the airport’s workforce. Costs for disparity studies can be significant

Measuring Costs and Benefits of Contracting and Workforce Initiatives 69 (e.g., $500,000 or more). For example, contracting disparity studies require expert analysis of several years of contracting and procurement data to determine if inequities exist in public procurement and contracting that adversely affect minorities and/or women. These studies also involve collecting and assessing qualitative and quantitative information, conducting public meetings, legal analysis, and preparing findings and recommendations reports. • Technology services. Software and other types of technology can be essential for performing certain types of research and data analysis. They can also be used for business diversity regula- tion compliance reporting or for processing certification applications. Software costs may be upfront or ongoing, depending on the program. Other forms of technology may be required for data collection, such as programs that can develop surveys, charts, or questionnaires, input-output tools, cost-benefit data tables, or those that take quantitative or qualitative impact data. Acquiring these services may be costly, as can be the training and time associated with learning how to use these programs and educating airport staff. • Compliance with regulations. Airport representatives may find that complying with federal and state regulations on diversity requires additional staff and labor hours. Compliance with FAA, U.S.DOT, or other agency diversity regulations may add to airport operating costs. Costs of regulatory compliance may also be magnified at small or non-hub airports, which have limited financial resources and staff (Unison Consulting, Inc. et al. 2013). Program Development and Implementation Outside consulting services may be engaged to help improve and implement the airport’s diversity contracting or workforce program. Airports may enlist a number of consultants or contractors for diversity program development and implementation. These costs are typically straightforward and easy to measure. Other Goods and Services Costs for additional goods and services can include: • Facility and equipment rentals to support outreach efforts. Some airports mentioned they were able to use their own spaces for small or medium-size events, but larger events tended to require renting outside facilities and equipment. These costs can be incorporated into a business diversity office or human resources budget, but in some cases, have also come out of separate budgets, such as a special events budget. Food, beverage, and other catering services are additional costs to consider. • Travel expenses for airport staff to attend events, trainings, or conferences. Several airports who participated in this research identified setting aside a portion of their budget for travel expenses associated with attending conferences, trainings, or events, such as those hosted by major airport associations like AMAC, ACI–NA, and AAAE. Several of these events have registration fees, which airport diversity offices usually factor into their annual budgets. • Trade association memberships. The most common trade associations discussed in inter- views conducted for this research were AMAC, ACI-NA, and AAAE. Several of these types of airport or diversity associations have costs associated with membership, such as annual membership fees. Indirect Program Costs Many costs of diversity programs will be straightforward and easy to document and track as part of the program’s budget. However, many individuals and departments contribute to a successful program, even if they are not operating under the diversity program’s budget. To have

70 Guidance for Diversity in Airport Business Contracting and Workforce Programs a complete understanding of the cost of a diversity program, airports must account for these indirect costs. Examples of these indirect costs include: • Staff time from numerous other offices in the airport needed to successfully implement the diversity program. Some airports or airport departments within city agencies will partner with other agency or airport departments to execute certain programs. Time and resources from other airport departments for diversity efforts are not always recorded in the business or work- force diversity offices’ budgets, though they are often absorbed in airport business diversity costs overall. • Inefficiencies introduced by oversight or management of contracts. Airport employees have many responsibilities to ensure that the airport runs smoothly and contracts are properly Benefit-Cost Tool This Guidebook includes a spreadsheet-based Benefit-Cost Tool to help airports track progress toward their business diversity goals and measure their impact. It includes a detailed User Guide (Figure 1) that explains the Tool and how it can help airports design and support their diverse business programs.

Measuring Costs and Benefits of Contracting and Workforce Initiatives 71 executed. Running a successful diversity program may require these employees to oversee, track, document, or report information related to the diversity program. These activities may add small amounts of time to the work flow of these employees, adding up to potentially significant indirect costs. • Support from other airport departments, such as marketing, legal, and information technol- ogy. Many airports interviewed for this research reported having additional diversity activi- ties, such as marketing, that were not necessarily captured in their line item budget. Other departments outside of the diversity office may have activities that help promote diversity throughout the airport using their own resources. Those costs are not always recorded as part of the diversity office’s budget but should be included when estimating the full costs of imple- menting a diversity program. For example, legal counsel is often incorporated to help air- port staff understand their obligations and limitations in terms of diverse hiring strategies. Legal costs associated with diverse hiring strategies are often captured under the airports’ legal department budget rather than under the diversity program budget. Aside from legal expenses charged to the airport, staffing costs associated with legal professionals’ time spent on a project or program also contribute to overall legal costs. Techniques for Measuring Benefits The direct costs of diversity programs are relatively easy to measure because they are typically documented and tracked in the airport’s budget. In contrast, benefits of diversity programs are much more difficult to measure. Many of the benefits of diversity will manifest in ways that affect the success or the financial bottom line of the airport but are difficult to quantify. For example, diversity can increase competition and drive down contracting costs, improve innova- tion, and reduce staff turnover. Each of these benefits can result in a very real monetary benefit to the airport, but confounding factors make these benefits difficult to pinpoint. Furthermore, diversity has many intangible benefits, and diverse workplaces are often rewarded in ways that cannot be monetized. For example, improving goodwill toward the airport and creating a happy workplace cannot be monetized. While the benefits of improved diversity contracting programs are real, estimating the monetary value of these benefits may require extensive research and analysis for which airports may not have the necessary time and resources (expertise and finances). For example, the value of a diverse firm gaining skills or competitiveness as a result of diversity program technical training is difficult or impossible to monetize. This section provides guidance on how airports can measure some of these benefits. Some benefits can be estimated using monetary measures, but airports may need to measure other benefits through the use of qualitative information or proxies. Economic Impact Studies The most straightforward way to estimate monetary benefits of diversity in contracting and concessions is to estimate the economic impacts of contracting payments that go to diverse businesses. Many airports conduct economic impact studies to communicate these economic benefits of diversity. As illustrated in Figure 5, the total economic effect of airport contract expenditures for diverse businesses includes the direct, indirect, and induced effects of contracts awarded to diverse businesses. These effects are measured through job creation, earned income, and gross regional product, which is the market value of all final goods and services produced within a region.

72 Guidance for Diversity in Airport Business Contracting and Workforce Programs • Direct economic effects represent impacts on industries directly involved with airport programs, such as businesses contracting directly with the airport to provide a service. • Indirect economic effects account for impacts on supply chain industries, such as businesses that provide raw manufacturing inputs to the directly affected industries. • Induced economic effects lead to additional impacts on other industries as program partici- pants and employees of directly and indirectly affected industries spend money in the local economy. Economic impact studies are well suited to evaluate the following types of benefits: • Distribution of economic benefits to diverse groups. • The value of diversity to the local community and region. This will depend on the airport’s ability to track the proportion of airport expenditures being paid to local businesses. These studies are expensive and are typically conducted on a periodic basis. The Benefit- Cost Tool accompanying this Guidebook provides airports the means to develop a high-level Application of the Benefit-Cost Tool The Benefit-Cost Tool includes functionality to estimate the economic impact of contracts awarded to diverse firms. This is accomplished by combining user input with the tool’s unique Input-Output model (Figure 6). Economic impacts are conveyed in auto-populating tables and graphical representations. Figure 6. Example of economic benefits output table. Figure 5. Types of economic impacts.

Measuring Costs and Benefits of Contracting and Workforce Initiatives 73 economic impact analysis when a formal economic impact study is outside the airport’s budget, or to provide annual data on economic impacts in between formal studies. The Benefit-Cost Tool compiles payments to diverse businesses in the airport’s contracting and concessions programs and uses state-specific economic impact multipliers to calculate the economic impacts for DBEs, ACDBEs, and other diverse businesses that are not certified. It helps airports track progress toward their DBE and ACDBE goals. It also lets them track local and small business programs. The tool, which is in an Excel spreadsheet and requires no additional software, includes detailed instructions to help airports enter data and evaluate the results. The Benefit-Cost Tool User Guide, which accompanies this Guidebook, provides more detailed information and instruc- tions on how to use the Benefit-Cost Tool to estimate these benefits. Tracking Contractor Participation Some of the benefits that result from contracting with diverse businesses include improv- ing the ability of diverse businesses to gain skills and become more competitive. This results in benefits to the businesses but also to the airport because it will have access to a larger pool of Application of the Benefit-Cost Tool Airports can use the Benefit-Cost Tool to document and track diverse business participation in: • the contract bidding process; • prime versus subcontracts; • federally funded versus non-federally funded contracts; • different types of contract activities, e.g., construction, professional services. The tool allows users to seamlessly compare these different contract categories by a wide array of auto-populating tables and graphics that are based on user input (Figure 7). Figure 7. Example of tool output graphic comparing ACDBE business participation on prime concessions contracts.

74 Guidance for Diversity in Airport Business Contracting and Workforce Programs skilled businesses and greater competition on contracts. Ultimately, these improvements can drive down contracting costs. These monetary benefits are difficult to estimate, but airports can track details of contractor participation in the contract bidding process and in contract awards as a proxy for these benefits. As airports work with a more diverse group of contractors in both prime and subcontracts, the more likely it is that the airport is reaping benefits. Tracking contractor participation also helps airports identify where efforts need to be focused to continue to make improvements. Specific details that airports should track include: • The number and type of businesses bidding on contracts with the airport. Diversity in the bidding process is often a precursor to business diversity in airport contracts. Tracking this information will also alert airports to potential barriers in the bidding process. For example, if diverse businesses repeatedly bid on projects but do not win, the airport can examine this more closely to understand why the diverse businesses are not able to win the project. • The number of and type of businesses winning contracts with the airport. Tracking this information helps the airport see where they have had success in contracting with diverse businesses. • The advancement of diverse businesses in airport contracts. This includes businesses moving from subcontracting to prime contracting, expanding their scope of expertise, or graduating completely from the DBE or ACDBE program. These are all signs of improvements to diverse businesses and the airport’s access to qualified businesses. • The disbursement of diverse business participation across several types of contracts. For example, airports will want to engage diverse businesses in all types of contracts. Tracking business participation based on the type of work being completed will help the airport identify when diverse businesses are concentrated under specific types of contracts. All these measures indicate the strength of an airport’s diverse business participation in contracting. Tracking these metrics can also help the airport gauge the success of its outreach efforts and equip the airport with information needed for decisions about where additional efforts are needed. The Benefit-Cost Tool includes a feature that allows airports to track these details for contracts and concessions. See the Benefit-Cost Tool User Guide, a separate docu- ment, for more detailed information and instructions on how to use the Benefit-Cost Tool to enter and evaluate bids and contract awards over time. Tracking Workforce Participation and Advancement Similar to tracking contractors, an airport can track workforce participation as a proxy for the workforce benefits. As previously discussed, a diverse workforce can result in benefits such as improving the work environment, reducing staff turnover, increasing qualifications of the workforce, and increasing innovation and productivity. In turn, these benefits can reduce the airport’s employment costs Specific details that airports should track include: • The breakdown of employees at the airport according to race and gender, or any other measure of diversity relevant to the airport. This is the most straightforward and commonly used metric to measure workforce diversity. • The length of employment across different types of employees. Longer employment terms are indicative of lower costs associated with staff turnover. Furthermore, high employee reten- tion suggests that the airport can maintain a qualified workforce and prepare a generation of young employees to transition more smoothly into airport management positions when older employees retire. Airports should examine how these employment terms differ according to gender and race.

Measuring Costs and Benefits of Contracting and Workforce Initiatives 75 • The frequency with which staff are promoted internally. High rates of internal promotion indicate the airport is cultivating skills and expertise internally and the workforce has oppor- tunities for advancement. Airports should examine how these rates differ according to gender and race. • The representation of diverse groups in upper level management and on the board of directors. Whether the diversity of the workforce is represented in leadership positions can affect the airport’s ability to incorporate diversity into strategic planning. All of these measures will help the airport understand the strength of its workforce overall and with respect to diversity. Employee Interviews and Attitude Surveys As previously discussed, a diverse workforce can improve an airport’s reputation and improve its standing in the local community. Over time, these benefits can help the airport attract a wider pool of talent and improve the airport’s ability to work with the community and navigate political issues that might arise. Generally, these benefits cannot be measured. However, airports can gauge employee satisfaction with respect to diversity through qualitative assessments. Airports can enhance their knowledge of workplace satisfaction in terms of diversity through the use of employee attitude surveys and exit interviews. These surveys should be anonymous and should address diversity issues most relevant to the specific airport and workplace. Surveys can be designed to evaluate numerous elements of the airport’s workforce and diversity program- ming. Questions can address topics such as: • Whether or not the employee is aware of, or has participated in, any of the airport’s diversity program workshops, trainings, or other professional development programs. The questions should also assess the effectiveness of these programs. • Whether or not the employee has ever experienced discrimination in his or her day-to-day job or as part of the airport’s performance evaluation or promotion process. In these cases, the questions should also be developed to help the airport understand the nature of discrimination. • Whether or not the employee reported the discrimination. If not, why? • In what ways the employee would like to see the airport improve diversity in the workforce. • Whether or not the employee feels comfortable at work. If not, why? Questions should be crafted to the airport’s specific diversity programs. The questions should help the airport understand employees’ perceptions with respect to inclusion, openness, and diver- sity. The questions can also be used to understand how participation in outreach efforts affects employees’ perceptions of diversity and inclusion at the airport. In exit interviews, the airport can include questions specifically about diversity, addressing topics similar to those listed above. Survey results can be used to provide qualitative feedback to the airport’s diversity program. The results can also be collected and analyzed in a way that produces quantitative but non- monetary results, for example, reporting the number or percentage of employees who provided a specific response. The airport can implement the survey on a periodic basis, track changes in responses, and measure progress over time. Monetizing Benefits Airports may be able to monetize some of the benefits described in Chapter 3 by following five basic steps (Diversity Best Practices 2009). 1. Identify a unit of measure that represents a unit of improvement. 2. Determine the value of each unit.

76 Guidance for Diversity in Airport Business Contracting and Workforce Programs 3. Calculate the change in performance data. 4. Determine an annual amount for the change. 5. Calculate the total value of the improvement. Step 2, determining the value of each unit, may be the most difficult part of monetizing benefits. For example, it may be relatively easy to measure the number of discrimination complaints, but it is far more difficult to attach a monetary value to each complaint. In this case, the airport could estimate the cost of the time required to address a discrimination complaint. A decrease in the number of complaints would result in a decrease in cost to the airport. However, we know that this does not fully capture the benefits of reducing discrimination complaints. If no monetary value can be assigned to these units of measure, the airport can conduct a quantitative non-monetary evaluation of these metrics by using a scaled approach in which important benefits or costs are scaled in their native units or, if necessary, on a relative scale based on professional experience. For example, the native unit for the benefit of internal promotions is the number of internal promotions per year. Alternatively, a metric like employee satisfaction can be measured on a relative scale based on the results of an employee satisfaction survey. Airports can assign a 10 on a scale of 1–10 for exceptional outcomes and a 1 for poor outcomes. While these measures are not monetary, they offer a quantitative way for airports to evaluate and track performance of their intangible key metrics over time. Example of Monetizing Costs If an airport uses staff turnover as a metric for diversity and inclusion, the airport can estimate the monetary benefit associated with reducing turnover by estimating the avoided cost of administrative onboarding and training (Figure 8). To identify the cost of staff turnover, estimate the average number of staff hours required to onboard and train new staff and multiply it by the average cost of staff time (hourly salary rate plus benefits and overhead). Also include non-labor costs (e.g., training materials, uniforms). Then multiply the labor and non-labor costs by the staff turnover rate. As staff turnover goes down, the reduction in these costs represents monetary benefits. Figure 8. Example of staff turnover formula. Cost of Staff Turnover Staff Turnover Rate Non-Labor Expenses Staff Onboarding Hours Loaded Hourly Rates

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Many airports are already taking active steps to address and unlock the benefits of a diverse and inclusive workforce. These programs provide benefits to the airport and surrounding communities, but there has not been a comprehensive benefit-cost analysis for diversity contracting programs and their impact on the workforce.

The TRB Airport Cooperative Research Program's ACRP Research Report 217: Guidance for Diversity in Airport Business Contracting and Workforce Programs provides guidelines to assist airport operators and various stakeholders at airports of all types and sizes to identify and quantify the benefits, costs, and regional economic impact of diversity contracting for airport businesses.

As recipients of federal funds, airports are required to administer a federal program that seeks to provide equal access for participation in airport-related business opportunities. Likewise, many airports are also obligated to do so under state and local programs.

The report includes additional materials: an Airport Diversity Contracting Tool and a Tool Users Guide.

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