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Total Economic Value (TEV) Symposium

16 July 2012 Keld Ludvigsen Chairman Performance Review Commission Member of Performance Review Body. Total Economic Value (TEV) Symposium. A well known concept. ‘To reduce the direct and indirect ATM-related costs per unit of aircraft operations.’

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Total Economic Value (TEV) Symposium

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  1. 16 July 2012Keld LudvigsenChairman Performance Review CommissionMember of Performance Review Body Total Economic Value (TEV) Symposium

  2. A well known concept ‘To reduce the direct and indirect ATM-related costs per unit of aircraft operations.’ Air Traffic Management Strategy For The Years 2000+ , Approved January 2000

  3. Context & background The Total Economic Value (TEV) • Is an attempt to monetarise direct and indirect ANS costs borne by airspace users • Provides a consolidated view of estimated ANS-related costs • Does not include safety in the calculations

  4. ANS-related economic costs

  5. The performance process and KPAs

  6. The PRB use of TEV so far • Target setting • Partially done for RP1 targets • No specificKPIstargets on TEV • Not mature for targetsetting • Wouldbluraccountability • Assessment of PPs • Wastakenintoaccountduringfirst loop of PPsassessment • Partially done in the second loop of PPsassessment • MonitoringPPs • Overall economic performance of service provision • Performance of one KPA/KPI deteriorates but overall performance improves

  7. What are the advantages of using the TEV? • Consolidated view, easy to understand • Enables to express all KPIs in monetary terms (except Safety) • Visualises the relative weight of the different KPAs and priorities of policy objectives • Provides a high level framework to illustrate interdependencies and trade-offs among KPAs over time • Genuine opportunity for a State/FAB to contribute to the overall performance improvements while taking local circumstances and priorities into account.

  8. Methodological issues related to the TEV • No commonly agreed methodology • The TEV calculation is: • dependent on exogenous factors outside ANS control • relies on assumptions for the monetarisation of ANS related inefficiencies • Limitations in measuring precisely some ANS-related indirect costs • Flight efficiency is primarily a network issue • En-route KPIs are well established but ANS performance at airports is still a relatively new area

  9. Ability to drive the “right” behavior? • Could reduce clear accountabilities for achieving performance improvements • Could lead to the misconception that improvements in one area have to come at the detriment in another area • Might lead to trade-offs between KPIs with different user groups • Might be misused as a justification to trade-off between KPIs with ‘hard’ incentives and KPIs without ‘hard’ incentives

  10. Way forward • A potential useful and powerful tool • Need to better frame the TEV concept • Build trust amongst all stakeholders • Evolution not revolution

  11. Any questions?

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