A More Flexible Approach to Valuing Flexibility
Abstract
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.
Document Details
- Document Type
- Technical Report
- Publication Date
- Apr 01, 2011
- Accession Number
- ADA604405
Entities
People
- David R. Jacques
- Erin T. Ryan
- John M. Colombi
Organizations
- Air Force Institute of Technology