An analysis of the costs and benefits of a system for FAA safety inspections

Abstract Utility analysis is a special case of cost-benefit analysis in which the targeted benefit is an improvement in work performance. Utility analysis is ordinarily used to estimate the dollar value of implementing one hiring procedure over a previous hiring procedure with a lower validity. Utility analysis can also be extended to situations in which workforce productivity changes as a result of an organizational intervention. In the present study utility methods were applied to an organizational change within the Federal Aviation Administration (FAA) that attempted to improve the workflow of aviation safety inspectors. The On-line Aviation Safety Inspection System (OASIS) allows FAA safety inspectors to log inspections using portable computers. This study estimates performance gains in dollars after the implementation of OASIS. The study found that aside from qualitative benefits such as better usability, the new system also saved labor time (about 19.2% of an inspector's workday). Conservative estimation procedures based on time data estimated by aviation safety inspectors indicated a net value derived from saved labor cost in excess of $16 million over the course of four years. Relevance to industry Many types of qualitative and quantitative data can support the effectiveness of performance improvement programs. However, much of this data is poorly understood by decision-makers. Utility analyses provide well-understood financial evaluations of human capital investments that are readily comparable to other business investments.

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