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3.2.2 A More Flexible Approach to Valuing Flexibility
Author(s) -
Ryan Erin T.,
Jacques David R.,
Colombi John M.
Publication year - 2011
Publication title -
incose international symposium
Language(s) - English
Resource type - Journals
ISSN - 2334-5837
DOI - 10.1002/j.2334-5837.2011.tb01204.x
Subject(s) - flexibility (engineering) , risk analysis (engineering) , schedule , computer science , investment (military) , value (mathematics) , operations research , systems engineering , engineering , business , economics , management , machine learning , politics , political science , law , operating system
The DOD routinely demonstrates its capability to develop phenomenal systems; however, these accomplishments are often tarnished by substantial cost and schedule overruns. While defense policies are continually being revised to address these problems, many believe that a more fundamental source of these overruns is the lack of flexibility in the systems being developed. But providing justification to invest in flexibility is a tough sell, as stakeholders struggle to quantitatively demonstrate the potential return on investment. Therefore, this paper introduces an alternative methodology for valuing the inherent ability of a system or design to accommodate change. The proposed methodology is essentially a modification of the current life cycle model and is premised on the notion that the need for capability changes in a program arise in a stochastic manner that can be incorporated into a continually updated, expected value model presented in terms of total program cost.