Valuing Flexibility. Phase 2

Abstract : Despite its ubiquity in the systems engineering literature, flexibility remains an ambiguous concept. There exist a multitude of definitions, which vary not only by domain, but within domains as well. Despite the confusion, flexibility is an oft purported means for dealing with the well-chronicled cost and time overruns that plague the DoD systems engineering projects. This report provides findings from research conducted under the RT-18a: Valuing Flexibility project. The primary goal of this research project is to identify, develop, and validate sound quantitative methods, processes, and tools (MPTs) that will enable DoD leadership and program managers to make a convincing case for investments in system flexibility when acquisition decisions are made. The research conducted during the first phase of this project (summarized in the Mid-Term Report) focused on identifying current quantitative MPTs for valuing flexibility in DoD contexts, critically evaluated the theoretical underpinnings of these MPTs, and delivered initial capabilities to value investments in flexibility to handle unforeseen sources of change. The current phase of the project focused in three areas: developing a taxonomy for evaluating MPTs for valuing flexibility in DoD contexts (including an overview of a software implementation), extending existing methods by developing new tools for valuing flexibility through life cycle costs, and using real and illustrative scenarios as examples for applying methods to value flexibility, including a detailed case study of flexibility in Ship Maintenance.