Below is a quote from an FAA AD (Superior Airparts - IO360 crankshafts) that, in my opinion, perfectly exemplifies how risk management principles should be applied to the maintenance and development of ALL aviation regulation. There is no room in this model for axe grinding, personal opinion, weasel words or rubbish. If only such a model was applied here...
Benefits
The FAA found that SAP, the manufacturer of the crankshaft assemblies, sold 192 SAP crankshaft assemblies to date: 115 of these crankshaft assemblies are estimated to be installed on type certificated airplanes and the remaining 77 crankshaft assemblies are estimated to be installed on experimental aircraft.
The FAA's risk analysis indicates that 100 percent of crankshaft assembly failures will destroy the engine. Using the historical incident data (2000-2014), the FAA assumes that 7 , 24.4 percent of crankshaft assembly failures will result in aircraft hull loss while 22 percent of crankshaft assembly failures will result in fatalities. There would be an average of 2.1 fatalities per each crankshaft assembly accident. Applying these probabilities to the estimated 115 crankshaft assemblies installed on type certificated airplanes, the FAA estimates that if these crankshaft assemblies are not replaced and continue to be used in these airplanes, this will result in 53 fatalities (2.1 fatalities per crankshaft accident x 22 percent probability of a crankshaft assembly failure resulting in fatalities x 115 crankshaft assemblies) and 28 aircraft losses (24.4 percent probability of a crankshaft assembly failure destroying the airplane). This AD will prevent all 53 fatalities and 28 aircraft losses.
Using an average price of $50,000 for a small single engine airplane, an average price of $30,000 for a 360-series engine and the Department of Transportation's $9.6 million estimate for the Value of Statistical Life (VSL) from the “Revised Departmental Guidance on Valuation of a Statistical Life in Economic Analysis,”6 the FAA estimated this AD final rule will result in monetized benefits of $512.8 million.7
Costs of Compliance The costs of compliance with this AD consist of the cost to remove and replace a crankshaft assembly.
The FAA estimates that this AD will affect 115 crankshaft assemblies installed on airplanes of U.S.registry. This cost estimate does not include 77 SAP crankshaft assemblies installed on experimental engines since this AD does not apply to these engines. The estimated compliance cost per crankshaft assembly is identified below. Labor cost = 61 hours per crankshaft assembly replacement x $85 Hourly Wage = $5,185.Equipment costs per crankshaft assembly replacement = $9,636(Source: Average of the two vendors).$5,185 labor per crankshaft assembly + $9,636 equipment costs per crankshaft assembly replacement = $14,821 compliance cost per engine.The total costs to U.S. operators is $1,704,415 ($14,821 x 115), or $119,309 in annualized costs in perpetuity using a 7 percent discount rate. There are no additional costs after removing and replacing the crankshaft assembly.
Therefore, the FAA estimates that the net benefit of this final rule will be $511.1 million ($512.8 million benefits -$1.7 million costs), or $35.77 million in annualized net benefits using a 7 percent discount rate in perpetuity