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Combining Deterministic and Stochastic Processes in FAA Cost-Benefit Estimating

Methods & Models Track

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For many years the FAA has struggled to provide quality products and services to the aviation community while controlling schedule and cost overruns. Agencies such as OMB, GAO, and the DOT OIG have stated that the FAA must become more fiscally responsible in providing these products. The agency has responded by developing in- house processes and procedures that will provide the framework to achieve this directive.

One area of inconsistency in the past has been application of uncertainty in estimated costs and benefits to achieve high-confidence estimates of program net present value (NPV) and benefit-cost ratio (B/C).

Through an analysis of the different variables and inputs that are used in various economic analysis models throughout the agency, the FAA has developed a standard process that will be used across the agency to determine such economic measures as B/C ration and NPV. Since these measures are key to FAA decision making, this standardization will give the decision makers the confidence that they are making acquisition decisions across functional areas using the same metrics and criteria.

The proposed paper will focus on the methodology used to determine the process, as well as the process itself. The paper will also provide an update on last year’s presentation “Improving the Cost Estimating Capability at the FAA”.


Katrina Hall
Ms. Katrina Hall is a senior cost estimator and operations research analyst at the Federal Aviation Administration. With over 15 years of cost estimating experience, she began her federal career working for the Navy at Naval Surface Warfare, Indian Head Division and more recently the Federal Aviation Administration. Katrina holds a Bachelor of Science degree in Industrial Engineering and is Level III DAWIA Certified in Business Financial Management. Her background includes, but not limited to; cost benefit analysis, linear programming, linear regression, financial analysis, and building cost estimating models in support of major acquisitions.

Mark Kipperman
Mr. Mark C. Kipperman, a SCE Certified Cost Estimator/Analyst, is a senior cost analyst at BAE Systems, with prior experience at LMI and Science Applications International Corporation (SAIC). He has performed cost-benefit/economic analysis and led analysis teams evaluating a wide variety of FAA and NASA programs. Mr. Kipperman also led a team of systems engineers that evaluated requirements for ground-based air navigation systems after implementation of satellite-based air navigation. Prior to those assignments, Mr. Kipperman served in the Air Force as air traffic control and landing systems program manager, C-130 and C-5 instructor navigator, and communications squadron commander. Mr. Kipperman has a bachelor’s degree in mathematics and a master’s degree in systems management.