Assigning Monetary Values to Performance Improvements

Measuring the monetary value of performance improvements is difficult. Whenever possible, the Air Force should attempt to justify bundling decisions on the basis of cost savings alone. That said, bundling can dramatically improve performance, and fairly simple methods can be devised to approximate the monetary value of many different kinds of performance improvements. This appendix • offers a broad overview of the challenge of estimating the monetary value of performance improvements • offers two examples to illustrate different ways to estimate the value of improvements • asks how estimating the monetary value of performance improvements relates to broader Air Force efforts to reduce total ownership cost • suggests a set of principles that the Air Force could use to structure a strategic effort to estimate the value of bundling changes that improve performance in specific ways. The monetary value of any performance improvement depends on what the Air Force does when that improvement occurs. If a change in bundling improves performance, the Air Force can react in one of